Pakistan-India to hold TAPI pipeline talks on Jan 24-25

Petroleum Minister Dr Asim Hussain left for India on Monday to hold talks with his Indian counterpart on the issues of security of the Turkmenistan Afghanistan Pakistan and India (TAPI) gas pipeline and transit fee, which will be held in New Delhi on January 24 and 25. An official source said the Pakistani delegation also includes Joint Secretary Admin of the Ministry of Petroleum and Managing Director of Inter State Gas System. He said the two day talks will center around the security cover for the pipeline through Pakistan and subsequent transit fee. For the transit fee two international formulas of the transit pipeline length and volume of the natural gas will be discussed. During talks both the countries would be presenting their proposals on the transit fee that would be shared with both the governments before the final decision.
Turkmenistan has already finalised the Gas Sale Purchase Agreement (GSPA) with all the participating countries for the $7.6 billion worth TAPI gas pipeline that will pave the way for the supply of 3.2 billion cubic feet of natural gas per day (bcfd) from the South Yolotan /Osman and adjacent gas fields to the South Asian states through a pipeline. The pipeline will cover 1,680 km from Turkmenistan through Herat and Kandahar in Afghanistan, cross the Pakistan border near Chaman to pass near Zhob, DG Khan, Multan, and onwards to Fazilka near the 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 the risk of transportation and transit variability through Afghan territory both the countries also agreed on a risk sharing formula. The agreement also contains a clause for gas price review after five years.
The source said the price of gas has remained the major outstanding issue. Pakistan wants 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 the signing of all the contracts with gas flow target of 2016.