Gas contract between India and Pakistan
The U.S. has, for almost 20 years, supported the plan to pipe natural gas over 1,100 miles from Turkmenistan via Afghanistan to Pakistan and India — commonly referred to as the TAPI pipeline. But the project has gotten nowhere because of the Taliban insurgency in Afghanistan and commercial disagreements between the partners.
Despite security concerns, the countries involved have continued to push forward. For the U.S., the project offers a way to further isolate Iran, which is trying to build its own gas pipeline to Pakistan. It also could help deepen economic ties between India and Pakistan — rival nations that Washington wants to see cooperate more to help forge stability in the region, particularly Afghanistan.
Turkmenistan, a major supplier of natural gas, views the project as a way to reduce dependence on Russia and China as export markets. And India and Pakistan hope Turkmenistan’s gas will help meet their huge energy import needs.
On Wednesday, state-owned energy companies from India and Pakistan will sign a 20-year agreement with Turkmenistan to purchase up to 33 billion cubic meters of gas a year via the pipeline, said Muhammad Ejaz Chaudhry, secretary of Pakistan’s Ministry of Petroleum and Natural Resources. An Indian government official declined to comment.
The countries recently agreed at a meeting in Pakistan on how much Afghanistan should get in transit fees, disagreements over which had been holding up a gas-purchase agreement. Afghanistan also will buy a small amount of the gas but has yet to reach an agreement with Turkmenistan.
The signing, which will take place in Turkmenistan, is backed by the Asian Development Bank, which is funding a small part of the project and helped to broker Wednesday’s deal. The U.S. isn’t playing a direct role in the negotiations but has supported the pipeline since the 1990s, when a Unocal Corp.-led consortium entered talks with the then-Taliban government.
It remains unclear how the project can progress given that the Taliban control large swaths of southern Afghanistan and parts of the Afghanistan-Pakistan border. A separatist rebellion in Pakistan’s southwestern Baluchistan province, through which the pipeline must also pass, further complicates the picture. Andrew Neff, a Moscow-based senior energy analyst at IHS, a global consultancy, said instability in Afghanistan means the pipeline — estimated four years ago to cost $7.6 billion to construct — is unlikely to attract financing from Western banks.
“The main hurdle is the security concerns in Afghanistan,” Mr. Neff said.
The U.S. is trying to squeeze Iran to give up its nuclear program by forcing countries like India to reduce their purchases of Iranian crude oil. The U.S. has promoted alternative sources of energy, signing a civilian nuclear deal with India and pushing projects like the TAPI pipeline.
New Delhi recently has begun to cut back on Iranian crude purchases, under U.S. pressure to do so by the end of June or face limited sanctions.
But Pakistan has refused to pull out of the planned $1.5 billion pipeline with Iran, arguing it needs to push both the Iran and TAPI pipelines to meet a looming energy shortage. “Pakistan can’t afford to withdraw,” Mr. Chaudhry said.