After Taliban’s takeover of Afghanistan, TAPI is extra of a pipe dream

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The regime change in Afghanistan and the removing of Western political affect will in all probability make the implementation of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gasoline pipeline much more troublesome than earlier than.

Simon Pirani, senior analysis fellow on the Oxford Institute for Energy Studies (OIES), advised New Europe by cellphone on September 10 the proposal to export as much as 33 billion cubic metres of pure gasoline per 12 months by means of an approximately 1,800-kilometer pipeline from Turkmenistan to Afghanistan, Pakistan and India was already economically unfeasible even earlier than the Taliban’s fast takeover of Afghanistan.

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“Let us ignore for the moment the high gas prices because this is something probably temporary so without these high gas prices, which will not continue forever, basically it’s very hard to see how the economics of TAPI can work under any circumstances. Unless you think the high gas prices will go on for 15 or 20 years, then this project does not work because then it is cheaper to bring LNG (liquified natural gas) to India or to Pakistan and the difficulties of building the pipeline and the expense of building the pipeline mean that this project cannot work,” Pirani stated.

“This was always been the situation for many years and for many years when with colleagues I was looking at this pipeline, I had the impression that although the economics do not work, it was supported particularly by the Asian Development Bank and as US diplomats in Central Asia say as a ‘Peace Project’. In other words, it was their idea of nation building in Afghanistan that it would not only help to create a non-Chinese export route for the gas in Turkmenistan, which is good from the United States strategic point of view but also it would help with this nation building which is also part of the United States strategic view,” he argued. “Well, we had the Trump Presidency and now we had the withdrawal from Afghanistan and so clearly this strategic prospective of the United States now no longer exists so I think that this reduces still further the likelihood that this TAPI pipeline will ever be built,” Pirani added.

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Commenting on what does regime change in Afghanistan imply for Central Asia and funding threat, Chris Weafer, co-founder of Macro-Advisory in Moscow, wrote in a observe to buyers on September 2 that Turkmenistan is greatest positioned politically. He reminded that the federal government in Ashgabat has maintained frequent and direct contacts with the Taliban and, at a February assembly, secured an settlement to permit the TAPI gasoline pipeline and the Turkmenistan-Afghanistan-Pakistan (TAP) Power Interconnection tasks to proceed.

“But these also depend on major financial support from IFIs, such as the World Bank, and will be delayed for some time,” Weafer wrote, including that it might speed up the plan to export gasoline to Europe. “The inevitable stalling for these projects may lead to a greater and more immediate focus on the proposed Trans-Caspian gas pipe that would bring Turkmenistan gas to Europe via the Southern Gas pipeline. This would help improve Ashgabat’s relations with the EU and, possibly, help in the government’s efforts to attract more Western investment,” Weafer argued.

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But Pirani famous that the eastward extension of Southern Gas Corridor and economics of taking the gasoline from Turkmenistan throughout the Caspian Sea and bringing it to Europe are very problematic with out excessive gasoline costs persisting for a few years. “I cannot see that. What I can also see is that, if we are talking about 20-30 years, we are talking about the changing of energy policy in Europe. I think the consensus now is that this is going to mean lower gas demand in Europe over longer term even though the gas demand in Asia and other places is going up so I’m pessimistic about TAPI and the Southern Corridor,” Pirani stated.

“The bad luck for Turkmenistan is that it’s landlocked apart from the Caspian Sea. It’ very far from where large quantities of gas are needed. This is the natural and geographical circumstances that Turkmenistan was cursed. Historically, the gas resources were developed in the context of the Soviet Union, that worked fine but that no longer exists, of course,” he stated.

Marika Karayianni, Caspian power professional at University of Peloponnese, advised New Europe on September eight the TAPI pipeline is assessed to be delayed attributable to stability and safety causes associated with the Taliban regime. Regarding the regime change in Afghanistan, Karayianni stated she doesn’t foresee any impact, both constructive or destructive on the Trans Caspian. “There is no interconnection between these two pipeline projects, the end markets are completely different. And the economics as well,” she stated and added, “The Trans Caspian issue is quite complex, its realization will be delayed for several reasons”.

Meanwhile, Weafer famous that Afghanistan has the biggest reserves of undeveloped minerals. The change of presidency and the removing of Western political affect opens the door for Chinese funding into Afghanistan,  he stated, including that the most important prize is the estimated $three trillion price of undeveloped minerals within the nation, together with giant deposits of rare-earth metals. “But China will be wary of engaging directly with the Taliban given the very harsh criticism of the leadership against China’s treatment of the Muslim Uighurs,” Weafer stated and added, “China will be nervous of the extremist groups, such as ISIL, who are predominantly in the AfghanistanChina border regions. Beijing will probably try to pursue investment projects via Pakistan, which has a close political relationship with the Taliban”.

comply with on twitter @energyinsider


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