TAPI gas pipeline project: Singapore, NY, London road shows ‘well received’: ministry

WASIM IQBAL

ISLAMABAD: Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas projects, in coordination with Asian Development Bank (ADB), organised three road shows between September 11-20 in Singapore, New York and London to gauge the market response to the gas pipeline project.

The project’s working paper, obtained by Business Recorder, showed that last year, based on ADB’s request to act as Transaction Advisor (TA) of the project, the governments of four member countries consented the ADB to work as TA for the project on agreed TORs. The ADB had planned these road-shows in major financial hubs to gauge market response.

The first and second road shows were held in Singapore on September 11 and in New York on September 13-14, while the third one was held in London that started on September 17 and concluded on September 20.

The road shows were attended by representatives from ADB, Turkmenistan, Afghanistan, Pakistan and India.

Pakistan delegation is represented by Mobin Saulat, the Managing Director of Inter State Gas System (ISGS), and a team comprising technical, commercial and legal experts from ISGS.

The Ministry of Petroleum claimed that the Singapore road show was very well received by the market and renowned companies and financial institutions such as Petronas, Temasek and State Bank of India attended the road show. Invitees were given comprehensive presentation by ADB and TAPI members on overall structure of the project, supply source, the market demand in Afghanistan, Pakistan and India. Invitees were also updated on the current status and way forward.

The New York road shows were attended by world leading IOCs such as Chevron and Exxon Mobile and leading financial institutions Citi Group and US Exim. All participants expressed a keen interest in the project. In the London Road Show, TAPI Parties met with representatives of British Petroleum, Shell, British Gas and Morgan Stanley. Invitees for upcoming shows are Mubadala Group, Macquarie, RWE and Deutsche Bank.

Prior to road shows, Ministry of Petroleum registered its concern to its government. It says: “ADB’s recent stance that it shall assume role of TA after the Road-Shows as the exact TORs vis-à-vis investors’ expectations as regard to Rate of Return or potential role/participation in upstream (Gas supply source) etc. shall be clear after the Road-Shows is a concern for Parties, particularly Pakistan and India being deviation from earlier agreement. Our concern, also shared by Indian side, is that ADB should upfront commence work on transaction advisory as have already agreed by TAPI parties without any delay. ADB should issue the Transaction Advisory Mandate Letters before the Road-Shows to all four countries for approval by their respect governments to commence work of TA”.

Pakistan, Afghanistan and Indian during trilateral session 16th - 17th April 2012, Islamabad, three countries agreed on the transit fee rate. The three parties held meeting on 2nd - 3rd August 2012 and agreed that Parties shall resolve minor matters such as transit fee indexation mechanism and finalize the agreement before 25th August 201. On indexation mechanism, India proposed a US dollar based indexation as the transit fee rate has been agreed in US dollars whereas Afghanistan side proposed combination of Pakistan and Indian CPIs, however, are likely to agree on Indian proposal. Pakistan side also consider Indian proposal as pragmatic

TAPI Parties have already agreed under the Gas Pipeline Framework Agreement (GPF’A) signed in December 2010 that for project financing and Construction, a consortium of technically sound and financially capable companies shall be jointly formed. Further, TAPI Parties shall appoint a Transaction Advisor (TA) to bring in the Lead Consortiuml Lead Financier and broadly for the marketing of the project and updating the prefeasibility of TAPI Project.

The Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline Project aims to export up to 33 billion cubic meters (bcm) of natural gas per year through a proposed approximately 1,800-kilometre-long (km) pipeline from Turkmenistan to Afghanistan, Pakistan and India. The estimated cost of the project is $7.6 billion based on pre-feasibility study done by PENSPEN.

Pakistan-Turkmenistan and India Turkmenistan bilateral GSPAs were inked on May 23 this year. Turkmenistan-Afghanistan bilateral GSPA is in process of finalization. Earlier, Pakistan and Indian side recorded their concern that they will have to seek advice from their respective authorities on the participation in upcoming Road-Shows if the Turkmen-Afghan GSPA is not finalised till the start of the road-shows and Afghanistan acts a transit only country in the project.

In view of the project’s size and complexities, the Parties agreed that it is necessary to attract and select a consortium lead which can (i) attract financing, (ii) manage construction, and (iii) reliably operate the pipeline. This need is enshrined in the GPFA which was signed in December 2010 by Heads of State in Ashgabat, Turkmenistan.