One of major hurdles is how to lay pipeline in Balochistan province which has a history of blowing up pipelines? DESIGN: FAIZAN DAWOOD
ISLAMABAD: French firm Total is working behind the scenes to take the lead on an ambitious pipeline connecting Central and South Asia, sources close to the project say, pioneering a novel gas exchange mechanism to overcome legal hurdles.
It is one of the most ambitious energy projects in the world, connecting the giant gas fields of Turkmenistan to Pakistan and India, two emerging energy-hungry markets, while crossing the rocky valleys of southern Afghanistan which are partly controlled by Taliban insurgents.
Following the withdrawal of Soviet troops from Afghanistan in the late 1980s, US group Unocal and Argentina’s Bridas were chomping at the bit to build major gas routes in a re-play of the 19th century “Great Game” when Russia and Britain jostled for control of the strategic region.
Over the past few years, rivalry has given way to the idea of regional cooperation for an 1,800 kilometre pipeline connecting Turkmenistan-Afghanistan-Pakistan-India, or more simply TAPI.
Last year, sources close to the project had indicated US giants ExxonMobil and Chevron were interested in leading the $7.5 billion project.
Since then, new players have announced their interest.
“Other companies, including Total are now in the race and they are actively negotiating with Turkmenistan,” said Mobin Saulat, director of the Pakistan’s Inter State Gas System which is charge of the Pakistani part of the pipeline.
He also named UAE’s Dragon Oil as a contender. Total declined to comment on the reports when contacted by AFP.
Chevron and ExxonMobil are trying to convince Turkmenistan to cede control of some of its gas fields, so far without success since Turkmenistan law forbids handing over onshore assets to foreign companies.
Total, on the other hand, “may agree to be the leader of the consortium without holding direct shares” in Turkmen fields, said another official in the sector requesting anonymity.
To work around the problem, TAPI partners envisage an exchange system: companies controlling gas reserves in the Caspian Sea will pump in an equal amount of gas to Turkmen territory to that which they want to export from the country, allowing them to abide by local law.
“Nobody wants just to have a pipeline, everyone wants a piece of the cake,” said Werner Liepach, Pakistan director of the Asian Development Bank (ADB) which wishes to find a lead company by the end of November.
On the subject of the proposed exchange, he said: “We looked at various options on how to make that happen, so that is certainly one option.”
“(You) give the volume back to Turkmenistan in that area and instead they will get the volume from where our pipeline will start,” explained Saulat.
“That is new. Last time, it was considered but not in details because we were hoping that these companies like Chevron and Exxon will be able to negotiate and get the stake upstream.”
Even as a clearer picture of the project begins to take shape, there remain several major hurdles – namely, how to lay the pipeline across southern Afghan valleys, controlled in part by the Taliban, and Pakistan’s restive Balochistan province, home to an insurgency with a history of blowing up pipelines?
According to Christophe Jaffrelot, a regional expert at the Sciences Po in Paris, even if the “Baloch question” can be overcome by redesigning the route to avoid rebel areas, the Afghan problem remains. “There is no ideal route,” he told AFP.
Afghanistan desperately wants the mega-project in the hope of profiting from valuable “rights of passage” for its cash-strapped reserves.
“One can hope that the Afghans need the cash so much that they reach a deal to share it around rather than letting it get blown up, but this is a gamble because there are always extreme groups that can raise the stakes by taking action,” said Jaffrelot.
Beyond the issue of securing the pipeline, regional politics, in particular Indo-Pak tension, could impact the final outcome.
Hopes were high the two countries could finally move to normalise ties after the election of two right-of-centre leaders this year and last in New Delhi and Islamabad respectively, but that has so far not materialised with Pakistan’s Nawaz Sharif distracted by a political crisis at home.
“The multiplicity of the factors involved is not really good for the pipeline, there has to be some definite, very strong geopolitical will among not only the oil companies but the countries involved in this” said Simbal Khan, an analyst who has followed the project.