Petroleum minister to visit India for TAPI transit fee talks

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Petroleum minister Dr Asim Hussain will be visiting New Delhi to discuss the issue of transit fee for Turkmenistan Afghanistan Pakistan and India (TAPI) gas pipeline project with his Indian counterpart on January 24. Talking to reporters Petroleum Minister confirmed that he would be visiting India to discuss the issue of transit fee. He said India was currently out of the Iran Pakistan pipeline and could join the project in future only if Tehran was ready to provide additional supplies to New Delhi.
An official source said talks on transit fee will centre around the two international formulas of the transit pipeline length and volume of the transit natural gas. During the talks both countries would be presenting their proposals on the transit fee that would be shared with both governments before final decision. Turkmenistan has already finalised the Gas Sale Purchase Agreement (GSPA) with all the participating countries for $7.6 billion TAPI gas pipeline that will pave the way for the supply of 3.2 billion cubic feet of natural gas per day (bcfd) from South Yolotan /Osman and adjacent gas fields to South Asian states through a pipeline. The pipeline will cover 1,680 km from Turkmenistan through Herat and Kandahar in Afghanistan, cross Pakistan border near Chaman to pass near Zhob, DG Khan, Multan, and onwards to Fazilka near Pak-India border. Asian Development Bank (ADB) is acting as the facilitator and coordinator for the project and had funded a feasibility study of the project.
Pakistan and Turkmenistan have agreed on the gas sale price of $360 million cubic meter (mcm) at the Turkmenistan Afghanistan border after deduction of $29 mcm as transit and transportation cost through Afghanistan. The cost will be $10.28 mmBTU. The base price comes to 70 per cent of Brent oil parity in the mid country delivery point of Multan. The contract price formula comprising basket fuels of HSFO 380 centistokes (cst), HSFO 180 cst and Gasoil 0.5 sulphur, is based on prices of Singapore quotation of Platts oil gram. To share risk of transportation and transit variability through Afghan territory both the countries also agreed on a risk sharing formula. The agreement also contains clause for gas price review after five years.
The source said price of gas has remained the major outstanding issue. Pakistan wanted buyers to negotiate price jointly with the seller but Afghanistan and India negotiated price on bilateral basis with Turkmenistan. After the signing of GSPA by the four participating countries, the process for hiring Transaction Advisor is expected to be started. The project will take between four to five years to complete after signing of all the contracts with gas flow target of 2016.

1 COMMENT

  1. petroleum minister 's visit to India on settling TAPI transit fee issue is just a futile exercise to divert public attention from current emergency issues including bad governance, power and gas load shedding crises. Tapi gas project is in news for the last over a decade and will take another decade if at all it materializes.

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