Historic Agreements Bring Long-Awaited TAPI Pipeline Closer to Reality

News Release | 23 May 2012

TURKMENBASHI, TURKMENISTAN - After more than 20 years of delicate negotiations, a 1,800-kilometer natural gas pipeline that connects one of Central Asia's largest energy suppliers with South Asia's critically underserved market has come one step closer to reality, marking an unprecedented new chapter in regional relations.

GAIL (India) Ltd. and Pakistan's Inter State Gas System (Private) Ltd. today signed Gas Sales and Purchase Agreements with Turkmenistan that will lead to the supply of up to 90 million cubic meters of natural gas a day via the TAPI (Turkmenistan-Afghanistan-Pakistan-India) natural gas pipeline. Afghanistan also signed a Memorandum of Understanding on long-term gas cooperation with Turkmenistan.

"This is a truly historic moment of unparalleled regional cooperation," said Klaus Gerhaeusser, Director General of the Central and West Asia Department at the Asian Development Bank (ADB), which has acted as the TAPI Secretariat since 2002.

ADB has played a leading role in coordinating and facilitating the TAPI negotiation process over the past 10 years.

The bulk of exported gas will help meet surging energy demand in India and Pakistan - where energy needs are set to double by 2030 - while the remainder will alleviate chronic power shortages in Afghanistan.

"The pipeline represents a win-win scenario for each TAPI country, as it will give Turkmenistan with the world's fourth largest reserves more diverse markets and helps fuel the energy-hungry economies to the South," Mr. Gerhaeusser said. "Each country stands to gain, making this not only the 'Peace Pipeline,' but a pipeline to prosperity as well."

With the TAPI pipeline in place, Turkmenistan's gas will reach a greater range of overland markets, diversifying from its existing markets in Russia, Iran, and the People's Republic of China.

A Gas Sales and Purchase Agreement between Afghanistan and Turkmenistan is expected to be finalized shortly. The next step is for the four TAPI nations to attract commercial partners to build, finance, and operate the pipeline, estimated in 2008 to cost at least $7.6 billion.