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TAPI Pipeline: Will 2013-14 be the Tipping Point?

D Suba Chandran Director, IPCS Email: subachandran@ipcs.org The idea of constructing a 1,700 km long Turkmenistan-AfghanistanPakistan-Indian pipeline, which was in limbo for more than ten years, suddenly seems to be picking up in the recent months. Where does this enthusiasm come from? Will the project get implemented in 2017, as is being envisaged? For a long time, the security issues haunted the idea of pipeline from Turkmenistan, especially from an Indian perspective on the situation in Afghanistan and Pakistan. The proposed pipeline from Turkmenistan via Afghanistan will have to cross the insurgency prone Southern Afghanistan and Balochistan in Pakistan. Substantial part of the pipeline will have to go through a region, where the writ of the State in Afghanistan and Pakistan do not run deep. If their own writ and legitimacy is being challenged by insurgent groups in these regions, how can the State in Pakistan and Afghanistan provide security assurances? If Pakistan has problems in protecting its own pipelines in Balochistan, how can it assure the safety of TAPI pipeline? This was a primary concern, (perhaps, at times even used as an excuse) for going slow on the project. Second concern was the political situation and bilateral relations concerned with three primary actors in the region Afghanistan and Pakistan, and Pakistan-India. Though Indo-Afghan relations enjoy a high degree of understanding and assurance, Afghanistan-Pakistan and Pakistan-India political relations have seen an unstable curve. Pakistan and Afghanistan have been struggling hard to establish a productive and mutually accepted Afghan-Pakistan Trade and Transit agreement. Pakistan is extremely interested in importing electricity from Central Asia through Afghanistan, but does not want to extend transit to Afghan goods to India. Political relations between India and Pakistan need not be underlined, in terms of its volatile nature. More than the political relations between the two countries, the hard reality is civil-military relations and militant-State relations within Pakistan play a role in deciding Indo-Pak relations. Consider the fatwa issued by the TTP after Sachin Tendulkars retirement; the media in Pakistan was warned by the Taliban not to praise Tendulkar too much as he is an Indian! Besides the security and political relations, two other issues also played a role in creating negative sentiments about the TAPI pipeline. First was the ability to fund such a huge project. None of the four countries involved in the pipeline either individually or collectively were/are in a position to fund such a huge project. While international gas and oil giants such as the Chevron were interested in taking up the project, they did not want only to just build the pipeline. They would like to have the exploration rights in Turkmenistan as well; truth is, for the international giants there is more money in the exploration, than just building a pipeline. Second, there was

also a concern, whether Turkmenistan will have sufficient gas to export to Pakistan and India. One of the questions raised is, how much gas would be available, after Turkmenistan-China strategic agreement on gas supply. China has signed agreements to take substantial percentage of Turkmenistans gas exports. Unlike us, the South Asians, China went ahead and has laid the pipeline already, when we are still contemplating the feasibility study! Even if Turkmenistan has a reserve in their South Yolotan fields, do they possess enough infrastructure to explore the same and transport? Finally, there was a fear that the US has a vested interest in Turkmenistan reserves and would want to upset any larger Russian diplomatic initiative in the region and be a crucial factor in gas supply and pricing. It is no secret that the US wanted to undermine the Iran-Pakistan-India (IPI) pipeline and promote the TAPI as an alternative. These were some of major concerns until recently. Suddenly, during the last few months, there were multiple positive developments, providing new impetus to the TAPI project. Consider the following. In a meeting in Ashgabad, few weeks earlier, the countries in the region including Turkmenistan, India, Pakistan and Afghanistan agreed to fast track the TAPI project and even appoint a consortium. Countries involved in the TAPI have agreed and concluded Gas Sale and Purchase Agreement. Even Afghanistan, which was initially interested in only transit rights have signed an agreement with Turkmenistan to buy a portion of gas for domestic use. (India and Pakistan are to purchase 38 percent each of the total gas from Turkmenistan). Another major positive development in the TAPI process has been the approval by Asian Development Bank (ADB) as Transaction Advisor and the signing of the Transaction Advisory Services Agreement (TASA). Under the agreement, the four countries have agreed to pay (50,000 USD per month to the ADB. In return the ADB will advise and assist forming a consortium to take the process forward. Besides what is happening within the TAPI, few developments outside will also gives a new confidence to the entire process. First, the foreign minister of India has made a statement that Russia is keen to join the TAPI process. The Ambassador of Kazakastan to India has been quoted in an interview stating that his country will also be happy to be a part and be willing to export the crude to India along with the TAPI pipeline. If TAPI could be extended in the north to tap the Russian fields and get Moscow into the process, the TAPI process would not only get strengthened but also expand the process. Presence of other countries such as Russia will not only expand the stakes and interests, but also provide an international assurance. Besides Russia, the US has also made a huge positive statement, which would have an impact on the TAPI. The Iran nuclear deal essentially means the willingness of Washington to work with Teheran. More than what Iran would get out of the deal, what is it would be important to understand how this deal with Iran would impact on the regional energy cooperation. After committing to Iran-Pakistan-India pipeline, New Delhi had to withdraw its support to the IPI, primarily due to the pressure from the US. Obsessed with strangulating Teheran through sanctions, the US came down heavily on India and pressurized New Delhi to go slow on the IPI pipeline. Now, with a nuclear deal from its own side, US will have less leverage to

pressurize India against the IPI. For India, both the pipelines are important, if it has to meet the energy demands and maintain the economic growth. So what do the above mean? TAPI will become a reality in 2017, and gas will start flowing into India from Turkmenistan via Afghanistan and Pakistan? There are still issues bilateral relations between Afghanistan and Pakistan, and Pakistan and India; and the political situation in Afghanistan post 2014. However, recent developments also highlight, despite the inherent issues, the target looks less unlikely. Perhaps 2013-14 could very well become the tipping point in implementing the TAPI pipeline. By arrangement with Rising Kashmir