Pakistan, Turkmenistan ink gas agreement

Pakistan and Turkmenistan on Monday signed a bilateral agreement over the price of gas through the planned Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, officials said. The agreement was inked in Islamabad after President Gurbanguly Berdymuhamedov of Turkmenistan held talks with Pakistani Prime Minister Yusuf Raza Gilani. Both leaders witnessed the signing ceremony at the Prime Minister's house. According to the agreement, the price of the gas would be 30 percent less than the price of crude oil in the international market. The total cost of the project would be determined after negotiating Afghanistan on the transit fee and also India. Officials said that the agreement on the gas sales and purchase agreement (GSPA) is a major milestone as the project had been almost in cold storage since 1988-99. The 1,700-km pipeline will transport Caspian Sea natural gas from Turkmenistan through Afghanistan into Pakistan and then to India. Pakistan and Turkmenistan had signed the inter governmental agreement to provide a regular supply of natural gas from the Turkmen gas fields to the industries in Pakistan during the visit to Ashgabat by President Asif Ali Zardari in December last year. Pakistan Petroleum Minister Dr Asim Hussain said the formal signing of the agreement would take sometime because the transit fee for the pipeline in Afghanistan was not yet clear. "Turkmenistan claims the transit fee (in Afghanistan) would be lower but we think it would be higher, so we have to take into account the transit fee risk factor before signing the formal agreement," he added. He claimed that the financing for the TAPI pipeline project would not be a problem although the cost of the Pakistan segment was not yet clear because the project partners had not started the process for appointing a financial adviser for the structure. The original project started in 1995 when an inaugural memorandum of understanding between the governments of Turkmenistan and Pakistan for a pipeline project was signed. There had been no progress on the project due to several reasons, mainly instability in Afghanistan as the pipeline would pass through southern Afghanistan, the former stronghold of Taliban. Turkmenistan has the world's fourth largest proven reserves of gas and would pump in around 33 billion cubic meters per annum through the gas pipeline including 735 kilometers across Afghanistan and another 800 kilometers through Pakistan before culminating in India.