Uzbekistan’s intention to take part in the construction of Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline was discussed between presidents Mirziyoyev and Berdimuhamedov during the latter’s official visit to Tashkent on April 24. Mr. Mirziyoyev referred to TAPI as a ‘’grandiose’’ project that will help stabilize Afghanistan. The Uzbek president added that his country wants to be a party of this effort and that government representatives will soon head to Ashgabat in order for practical deliberations on the matter to kick off. However, the exact kind of Uzbekistan’s possible contribution to the implementation of TAPI hasn’t yet been clarified by either of the two sides.
The 1.814km TAPI will cover 214km, starting from the giant Galkynysh onshore gas deposit, 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, the provincial capital of Baluchistan, and Multan in the province of Punjab, finally reaching India at Fazilka. Its cost and capacity are estimated at $10bn and 33BCM, respectively. Under a 30-year sales and purchase agreement, Turkmengaz is going to allot 5BCM/a of natural gas to Afghanistan. Pakistan and India, where natural gas demand is predicted to rise by 50% until 2030, are going to receive 14BCM/a each. Financing, security concerns, related to the reception of the project by the Taliban and Islamic State factions in the territory of Afghanistan, as well as objections against the gas tariff rate, principally raised by Pakistan, have so far prevented TAPI from achieving significant progress. The Turkmen section of the gas link, which has been being built since late 2015, has reportedly been completed, while the start of the Afghan one was launched in February 2018.
For its part, Uzbekistan lately lifted a six-year-long gas blockade against neighboring Tajikistan under a contract signed in March by presidents Mirziyoyev and Rahmon, providing for the delivery of 126MCM in 2018 via the Muzrabad-Dushanbe main gas pipeline, at an advantageous price of $120/1,000CM, that will meet 30% of the TALCO aluminum plant demands. Furthermore, in 2016 Uzbekistan sent nearly 6BCM/a to Russia (to be reduced to 4BCM/a in 2018 in the context of a new five-year contract with Gazprom), 1.5BCM to Kazakhstan and 4.3BCM to China. The country wants to up exports to Beijing to 10BCM/a by the end of 2020 under a long-term contract with PetroChina. But owing to the high domestic consumption rate, estimated at 51.4BCM in 2016 (including 30BCM for consumer consumption), Uzbekistan’s export potential is currently limited, even though Uzbekneftgaz plans to increase production up to 66BCM in 2018 from last year’s 56.5BCM. Taking all the above into consideration, Uzbekistan has a long way to go before being considered a major gas exporter, so what the country would most probably have to offer for the realization of TAPI is no other than political support and technical help. It is no secret that the two states enjoy cordial diplomatic bonds (following his win in the December 2016 presidential election, Mr. Mirziyoyev chose Turkmenistan as his first foreign destination), as well as close trade ties (volume of bilateral turnover increased by 55% in the first quarter of 2018).
Uzbekistan and Turkmenistan are also involved in another regionally important pipeline infrastructure project, the so-called Line D which aims to bring 30BCM/a of Turkmen gas to Western China via Uzbekistan, Kyrgyzstan and Tajikistan (the other three existing lines crossing Uzbekistan and Kazakhstan), and which was, interestingly enough, omitted from the agenda of the two presidents’ meeting in Tashkent. Turkmenistan’s exports to China amounted to just 1% of its total exports in 2009, increasing to almost 80% by 2015, a number mostly concerning natural gas exports. Meanwhile, Turkey, Turkmenistan’s second largest trading partner, accounts for only 5% of Turkmenistan’s overall exports. Ashgabat now expects exported gas volumes to China to grow to over 60BCM by 2020 (from today’s 30BCM). Line D was supposed to support this boost.
Despite the fact that work on Line D in Uzbekistan has been indefinitely suspended since March 2017 by decision of CNCP and Uzbekneftgaz, construction of the Tajik portion is said to have begun in December 2017 and Kyrgyzstan has announced that its own part will start being built at the end of 2019. Nevertheless, given the opacity surrounding the price agreed upon between China and Turkmenistan and the former’s de facto firmer bargaining position, it is yet questioned whether Ashgabat will have high earnings to anticipate from its Chinese business. One can assume this is the reason why presidents Mirziyoyev and Berdimuhamedov chose to highlight TAPI in their discussions as an export option that will lead Turkmenistan out of its hard currency crisis, spurred by the lack of exports to Russia (Gazprom decided to stop purchasing Turkmen gas in 2016) and the lack of access to neighboring markets, since both the Trans Caspian Gas Pipeline (TCGP) to Azerbaijan and now Line D appear stuck in limbo.
Available online at: http://www.caspianpolicy.org/energy/caspian-energy-insight-may-3-2018/#7
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