10 October 2007

India will formally join the US-backed Turkmenistan-Afghanistan-Pakistan gas pipeline project next month for importing natural gas from the Central Asian nation to meet its growing energy needs.
Besides formally including India in the project, the steering committee meeting called by project sponsor ADB on November 28-29 in Islamabad would also see the four nations signing Project Heads of Agreement and a Gas Pipeline Framework Agreement, official sources said.

Turkmenistan would make a presentation on gas reserves it has and volumes available for export to Afghanistan, Pakistan and India while the buyers would present their gas demands.

Upon signing of the 'Heads of Agreement', the four partners would undertake project feasibility studies and device financial structure.

According to the draft HoA, Turkmenistan has projected gas reserves of 159 Trillion cubic feet at its Dauletabad fields, off which 34.26 Tcf would be dedicated to the project.

Pakistan wants to import 15 million standard cubic meters per day of gas through the pipeline in the first year, 30 mmscmd in the second and 45 mmscmd annually in the third year and onwards. Of the 45 mmscmd gas allocated for India and Afghanistan over the 30 year project life, Kabul would take 5 mmscmd in the first year that would be raised to 14 mmscmd by the fifth year.

The meeting comes at a time when uncertainty surrounds the Iran-Pakistan-India pipeline project, which saw New Delhi not attending a recent trilateral official level talks in Tehran over unresolved transit issues with Islamabad.

US is opposed to India and Pakistan importing natural gas from Iran through a $7-billion pipeline and has been backing TAPI as an alternative to meet the growing energy needs of the two neighbours. Sources said the TAPI pipeline would be built by a consortium of national oil companies from the four nations by 2011-12.

The draft Gas Pipeline Framework Agreement provides for payment of transit fee to Afghanistan and Pakistan for allowing usage of their territories for passage of the pipeline, on internationally accepted cost-of-service based tariff methodology.

The two nations would be entitled to a transit fee based on the natural gas exiting their territories and not for the natural gas consumed, lost or disposed off within their territories.

Sources said the draft agreement also provides that the four nations would not levy any direct or indirect taxes, royalties, value added tax, duties and other payments on activities of the consortium implementing the project and on the transportation and transit of natural gas.

However, they would be free to tax the sale of gas in their respective territories.

Source: Rediff.com