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Turkmenistan Undertakes TAPI Pipeline Project

Turkmenistan Undertakes TAPI Pipeline ProjectTurkmenistan Undertakes TAPI Pipeline Project

Turkmenistan on Sunday started work on its part of a gas pipeline that will be linked to Afghanistan, Pakistan and India (TAPI), a $10 billion project designed to reduce its dependence on gas sales to Russia and China.

The ground-breaking ceremony was held near the city of Mary in the southeastern part of the Central Asian country, close to the giant Galkynysh gas field that is meant to provide gas for the 1,814-kilometer link, Reuters reported.

"By December 2019, the pipeline will be completed. It will have a capacity of 33 billion cubic meters," Turkmen President Qurbanguly Berdymukhamedov said at the ceremony, which was also attended by Afghan President Ashraf Ghani, Pakistan's Prime Minister Nawaz Sharif and Indian Vice President Hamid Ansari.

Although it is backed by hydrocarbon resources, the TAPI project faces several risks, such as the deteriorating security situation in Afghanistan and lack of clarity about its financing.

TAPI's construction is led by state gas firm Turkmengas and none of  the global energy majors has so far committed to the project that will cost as much as a third of Turkmenistan's 2016 budget.

The only company known to be in talks on TAPI currently is Dubai-based Dragon Oil that produces oil off Turkmenistan's Caspian coast. Gazprom was also looking to join the project in the past.

The Turkmen government also said on Sunday it had signed a "framework agreement" with a consortium of Japanese and Turkish companies to implement the third stage of expansion at Galkynysh that will boost the field's output to 95 billion cubic meters a year.

The consortium includes JGC Corporation, Mitsubishi, Itochu, Chiyoda and Sojitz of Japan as well as Calik Group of Companies and Ronesans Endustri Tesisleri of Turkey.

The government did not disclose any other details such as the cost of expansion.

Financialtribune.com