Turkmenistan pushes trans-Afghan pipeline

Updated 19 November 2012
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Turkmenistan pushes trans-Afghan pipeline

ASHGABAT, Turkmenistan: Turkmenistan is pushing ahead with plans to build a hugely ambitious pipeline to transport its gas through conflict-torn Afghanistan to India and Pakistan, despite concerns about the viability of the project.
Turkmen officials speaking at this week's Oil and Gas Conference in Ashgabat took every opportunity to talk up the pipeline while showing less interest in a similar project that would transport gas across the Caspian Sea to the EU.
The TAPI (Turkmenistan-Afghanistan-Pakistan-India) natural gas pipeline, which is backed by the Asian Development Bank (ADB), is regarded with suspicion as a wildly ambitious pipedream by some analysts.
"The realization of the TAPI pipeline project will allow an increase in exports of Turkmen gas," President Gurbanguly Berdymukhamedov was quoted as saying in a formal statement for the conference.
Sakhatmurad Mamedov, head of the state-owned company Turkmengaz, announced that the project had been "successfully pushed forward" in roadshows held in September with potential investors in Singapore, New York and London.
"The realization of the TAPI project will give an impulse to the development of the countries taking part in the project and will also strengthen stability in the region as well as creating new jobs," he said.
The 1,700-kilometer (1,050-mile) pipeline aims to transport more than 30 billion cubic meters of gas annually from Turkmenistan to consumers in Pakistan and India and relieve shortages in Afghanistan.
Turkmenistan in May inked sale-purchase agreements with India and Pakistan for the yet-to-be-built pipeline in a move hailed by the United States as a boost for regional integration.
Much of the pipeline will go through Afghanistan which neighbors both Turkmenistan and Pakistan but remains wracked by violence and instability.
According to the ADB, the TAPI in 2008 was estimated to cost at least $ 7.6 billion (6.0 billion euros) and the partners now face the task of attracting commercial partners to build, finance, and operate the pipeline.
The project enjoys the support of the United States, which is keen to deter subcontinent states from dependency on energy supplies from its arch foe Iran.
Deputy Assistant Secretary at the US State Department Bureau of South and Central Asian Affairs Lynne Tracy told the conference that Washington welcomed the progress made on the project even if the road ahead was a long one.
"The road ahead is long for this project, but the benefits could be significant and are certainly worthy of the diligence demonstrated by these four countries so far," she said.
She said the project would diversify Turkmenistan's energy market options, provide revenue and jobs for Afghanistan and bring clean fuel to the growing economies of Pakistan and India.
According to British auditors Gaffney, Cline and Associates, Turkmenistan has the second largest gas reserves in the world.
These are being eyed eagerly not just by Asian states but also the EU which wants to reduce its dependence on Russian imports.
Turkmenistan, Azerbaijan and the EU are continuing to negotiate an agreement for construction of a TransCaspian pipeline for exports of Turkmen gas to Europe and the EU's special representative for Central Asia Patricia Flor urged an acceleration of progress.
She said it would be better to sign long term contracts now than in five years time and there was no need to "excessively drag out the talks".
Yet discussion of the TrasnCaspian pipleline, a project that would be a rival for Russia's South Sream, was absent from the speeches of Turkmen officials, in contrast to their enthusiasm for the TAPI project.
Tracy said the United States also supports this pipeline and in a veiled reference to Russia said that if Turkmenistan and Azerbaijan agree on a pipeline crossing only their territorial waters, no other country has veto power over that decision.
Turkmenistan is also keen on diversifying its export routes which remain dependent on its former Soviet master Russia with whom it has occasionally had prickly relations and has already begun exporting gas to China.
Berdymukhamedov has embarked on cautious economic reforms and sought to attract foreign investment in the energy sector since becoming president following the death of his eccentric predecessor Saparmurat Niyazov in late 2006.
Yet the country remains one of the world's most isolated states with opaque decision making and Berdymukhamedov has faced criticism for failing to implement extensive political reform after the excesses of the Niyazov era.


Oil slumps as OPEC, Russia look to raise output amid US surge

Updated 36 sec ago
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Oil slumps as OPEC, Russia look to raise output amid US surge

SINGAPORE: Oil prices slumped on Monday, extending steep declines from Friday, as Saudi Arabia and Russia said they may increase supplies and as US production gains show no signs of abating.
Brent crude futures were at $75.09 per barrel at 0452 GMT, down $1.35, or 1.8 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were at $66.22 a barrel, down $1.66, or 2.5 percent.
Brent and WTI have fallen by 6.4 percent and 9.1 percent respectively from peaks touched earlier in May.
In China, Shanghai crude oil futures tumbled by 4.8 percent to 457.7 yuan ($71.64) per barrel.
The Organization of the Petroleum Exporting Countries (OPEC), as well as top producer but non-OPEC member Russia, started withholding supplies in 2017 to tighten the market and prop up prices, which in 2016 fell to their lowest in more than a decade at less than $30 per barrel.
But prices have soared since the start of the cuts last year, with Brent breaking through $80 per barrel earlier in May, triggering concerns that high prices would crimp economic growth and stoke inflation.
“The pace of the recent rise in oil prices has sparked a debate among investors on whether this poses downside risks to global growth,” Chetan Ahya, chief economist at US bank Morgan Stanley, wrote over the weekend in a note.
To address potential supply shortfalls, Saudi Arabia, de-facto leader of producer group OPEC, as well as top producer Russia said on Friday they were discussing raising oil production by some 1 million bpd.
“Crude oil prices collapsed ... after reports emerged that Saudi Arabia and Russia had agreed to increase crude oil production in the second-half of the year to make up for losses elsewhere under the production cut agreement,” ANZ bank said on Monday.
Meanwhile, surging US crude production also showed no sign of abating as drillers continue to expand their search for new oil fields to exploit.
US energy companies added 15 rigs looking for new oil in the week ended May 25, bringing the rig-count to 859, the highest level since 2015, in a strong indicator that American crude production will continue to rise.
US crude production has already surged by more than 27 percent in the last two years, to 10.73 million barrels per day (bpd), bringing its output ever closer to Russia’s 11 million bpd.
“Oil prices are showing symptoms of a falling knife as investors are jittery on the prospect of increased production from three of the world’s top producers,” Singapore-based brokerage Phillip Futures said on Monday.