Pakistan revives talks on pipeline project to import gas via Afghanistan

Authorities in debt-ridden Pakistan have resolved to restart talks with Turkmenistan and Afghanistan on a stalled natural gas pipeline project as Islamabad revealed a new energy tie-in with Russia.

The Turkmenistan-Afghanistan-Pakistan-India (Tapi) natural gas pipeline project, in discussion since the early 1990s, aims to export gas from Turkmenistan, which has the second largest gas reverses in the former Soviet Union, after Russia.

Pakistan’s government said in a statement that Petroleum Minister Musadik Malik and the executive chairman of Turkmenistan gas producer Turkmengaz, Maksat Babayev, signed what was described as a Tapi joint implementation plan in Islamabad at the end of last week.

The plan calls for the two countries to co-operate on a feasibility study for the segment of the pipeline that will run through Pakistan.

The government said that Pakistan Prime Minister Muhammad Shehbaz Sharif witnessed the signing of the document.

Russian connection

Earlier this week, Sharif also welcomed delivery of the first seaborne Russian oil cargo to the port of Karachi as the country seeks access to cheaper energy sources while its state finances remain under pressure.

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The government deemed the occasion a “historic milestone” in Pakistan’s bid to secure energy supplies.

A government statement said: “The arrival of discounted Russian crude oil underscores our dedication to strategic partnerships and economic diversification. This achievement strengthens our energy sector, ensuring sustained growth and development.”

Payment for the cargo was made in Chinese yuan, rather than in US dollars, complying with Moscow’s insistence on the use of alternative currencies to avoid payment delays related to international sanctions against the country’s banks and corporations.

Russia has stepped up its efforts to court Pakistan since the invasion of Ukraine in February 2022, as it seeks to grow markets for its oil and gas in countries such as China and India that have not joined in international sanctions.

A partner in Baku-based energy consultancy Caspian Barrel, Ilham Shaban has suggested that following the first oil deal with Pakistan and an already strong Russian presence in India’s oil market, the Kremlin also wants to export more natural gas to the two countries.

Moscow may consider gas exports via the Tapi pipeline a viable mid-term option “to counterbalance the country’s growing dependence on China as a key market after the loss of Europe” last year, Shaban said.

Gas flow reversal and swaps

Russia is already linked with Turkmenistan by the Central Asia – Centre gas trunkline network that was built in the Soviet time and has estimated throughput capacity of about 55 billion cubic metres of gas per year.

Moscow has proposed reversing the flow of gas in this underused network to enable gas deliveries to Uzbekistan via Kazakhstan.

Further upgrades could enable Russian transit gas supplies to reach Turkmenistan via Kazakhstan and then enter the Tapi system.

An analyst with Moscow-based brokerage BKS, Ron Smith, has suggested that Russia may also explore the possibility of swap arrangements with Turkmenistan that would deliver Gazprom-produced gas to Europe on behalf of the Central Asian country, with Turkmengaz supplying similar volumes of gas to Pakistan and India on behalf of Gazprom.

Earlier this month, a spokesperson for Russia’s foreign ministry said Ukraine will “inflict damage to the European Union and will shoot its own leg” if it decides not to extend the current five-year gas transit agreement with Russia after its expiry at the end of 2024, according to Russian state news agency Tass.

With the Nord Stream 1 subsea pipeline to Germany nonoperational after explosions last September, and Russia’s decision to halt shipments through the Yamal-Europe Pipeline to Poland and Germany, Ukraine remains the sole route capable of offering sizeable transit opportunities for the country.

The Tapi project aims to deliver up to 33 billion cubic metres per annum of gas from Turkmenistan via Afghanistan and Pakistan to India via a total distance of about 1800 kilometres.

The pipeline will pass through Herat, Farah, Nimroz, Helmand and Kandahar provinces in Afghanistan, running alongside the Kandahar-Herat Highway and then via Quetta and Multan in Pakistan to the town of Fazylka in India near its border with Pakistan.