Amid soaring tensions with Tehran, following the abrupt resignation of Lebanon’s Prime Minister, Saad Hariri, Saudi Arabia has decided to present itself as a potential investor in Turkmenistan’s oil and gas industry. Back in May 2016, it was Turkmen President, Gurbanguly Berdimukhamedov, who had paid an official visit to Riyadh, suggesting that KSA take part in the implementation of the transnational Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project, among other vital projects in Turkmenistan’s petrochemical and gas-chemical industries. At the time, Mr. Berdimukhamedov had highlighted three priority areas for collaboration on TAPI: supply of pipe products and gas equipment, construction loans, investments in the development of the giant Galkynysh onshore gas reservoir, from which the pipeline is going to originate, and participation in TAPI’s consortium.
Last week it was Saudi Energy Minister’s turn to express its country’s support for TAPI, on the sidelines of the fifth convention of the Saudi-Turkmenistan Joint Committee for Economic and Trade Cooperation, held in Riyadh. In particular, Khalid al-Falih, who also acts as Chairman of Saudi Aramco’s Board, committed that the Kingdom will supply necessary pipeline material for TAPI. It should be noted that, since Berdimukhamedov’s aforementioned meeting with representatives of Saudi business circles, Ashgabat has only managed to secure a $700M loan from the Islamic Development Bank to finance TAPI, a drop in the bucket considering the pipeline’s overall $10bn cost.
However, in the midst of the unfolding domestic tumult, topped by the recent purge of royal family ‘’rivals’’ by the Crown Prince Mohammed bin Salman, Saudi Arabia appears more interested in getting involved in Turkmenistan’s gas exploration activity. According to Mr. al-Falih, ‘’Aramco is looking at any possibility for investment in oil and gas production globally, including countries overlooking the Caspian Sea, and Turkmenistan, as I mentioned, is among the countries that have the most reserves, especially in gas.’’
Whether Saudi investment intentions extend to the lodging of an application for a tender launched by Turkmengaz regarding the third development phase of Galkynysh was not specified. Up until now, a group of Japanese and Turkish companies has offered to build $20bn worth of natural gas processing facilities in Turkmenistan, designed to remove carbon dioxide and water from gas extracted from Galkynysh. Moreover, the Chinese national oil and gas firm CNCP, earlier in 2017, also declared readiness to participate both in the tender and TAPI construction, further increasing geopolitical antagonism over who’s finally going to unleash reserves of the much in need of opening up Turkmen market. Total resources of Galkynysh are estimated at approximately 26.3TCM of commercial gas.
The 1.814km TAPI will cover 214km before reaching the Turkmen-Afghan border. In Afghanistan, it will traverse 774km through the provinces of Herat, Farah, Helmand, Nimroz and Kandahar. The 826km-long route within Pakistan will pass near Quetta, provincial capital of Baluchistan, and Multan in the province of Punjab, finally reaching India at Fazilka. The pipeline was first launched in December 2015 and is expected to carry 33BCM. Pipeline laying operations until the border with Afghanistan are scheduled to have been finalized by July 2018, in line with the existing timetable.
Nevertheless, construction on Afghan territory is likely to suffer delays due to the current decline in natural gas prices, Afghan ambassador to Turkmenistan Mirwais Nab announced last month. Turkmenistan’s contribution to the rising needs for natural gas supplies in India and Pakistan, predicted to expand by a further 50% until 2030, is seen as a means to escape from its nearly total export dependence on China, following Russia’s 2016 decision to resume imports of Turkmen gas. This is why TAPI project is considered a crucial piece of infrastructure for the achievement of the desirable eastward diversification objective by Ashgabat. And since security always remains a matter of concern, TAPI Steering Committee now holds consultations in order to address security challenges that could stand in the way of the project, Indian Ambassador to Turkmenistan Dr. Thatipamula Venkata Nagendra Prasad announced on November 13.
KSA support for TAPI has been affirmed at a time when its other regional heavyweight in the Middle East, Iran, is softening its stance, putting forward a settlement of debt-management issues with Ashgabat through dialogue, instead of suing Turkmengaz in the International Court of Arbitration, as managing director of the National Iranian Gas Company (NIGC), Hamidreza Araqi, stated last week. With Armenia’s latest proposal to pay off Iranian debt to Turkmenistan by barter likely to be rejected by the cash-thirsty Ashgabat, Tehran needs to work on a compromise, so that the Turkmen spigot reopens and the winter needs of the poorly supplied Northeast Iranian regions are covered.
Available online at: http://www.caspianpolicy.org/energy/caspian-energy-insight-november-15-2017/#4
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