Indian and Russia are likely to sign what may very well be the mother of all energy deals towards the end of this year, when Prime Minister Manmohan Singh visits that country.
The TAPI (acronym for Turkmenistan-Afghanistan-Pakistan-India) gas pipeline project, which will cost $7.5 billion, will span 1,678 km and is expected to go on stream by 2015.
It would supply at least 33 billion cubic metres of gas to India from the very first year, and the volume is expected to be increased dramatically year on year.
That will be a third more than what Reliance Industries will produce in a year considering its current rate of 50 million cubic metres of gas per day (or about 20 billion cubic metres in a year).
Sources said 33 billion mmscmd is only a start because Turkmenistan plans to export as much as 180 billion cubic metres every year by 2030, or four-fifth of its total production then of 225 billion cubic metres.
The Reliance gas is priced at $4.2 per mmBtu, while the supply from Russia is likely to be “at far more competitive prices” said Russian officials who did not wish to be named.
What makes this extremely interesting and even economically attractive is the willingness of the US, NATO, and Russia to work together on the project.
The Indian side of the pipeline will be constructed by Russian giant Gazprom.
Alexey M Mzareulov, consul of the Russian Federation in Mumbai, said his country’s interest in this project stems from the fact that Russia and India have long enjoyed excellent relations both in business and culture.
Both Russia and the US are keen on weaning away Afghanistan from poppy cultivation, hence making this country a partner in this project will be of extreme strategic significance.
Pakistan also needs investment in non-military commercial ventures. Moreover, it will allow the US to work out an alternative gas supply source for India after it managed to persuade it not to go ahead with the Iran gas pipeline deal.
The US and NATO will pay both Pakistan and Afghanistan for the security of this pipeline, and will also ensure that such security obligations are fulfilled. According to some sources, Pakistan and Afghanistan have also agreed to this deal.
Only India’s formal consent is required, and this is likely to be obtained by the end of this year. Incidentally, the Asian Development Bank (ADB) is also reported to have agreed to finance this project for the overall development of this region.
What about China? Will it object to ADB funding the way it did to India’s hydel projects in the North-East? No, say market watchers. This case is likely to be a lot different because it is being sponsored by Russia, NATO and the US with the consent of both Afghanistan and Pakistan.
In fact, such commercial tie-ups will also help reduce the levels of belligerence between India and Pakistan say these market watcher. All these factors could help contain any opposition that some sections of China’s government may harbour towards this project.
Russia’s interest in Turkmenistan is understandable. It owns 10% of the equity in the Turmengaz, the country’s gas supply company.
Moreover the entire management expertise and technology for Turkmenistan on this fron comes from Russia. Finally, as Russian experts say, few companies, other than Gazprom, have the expertise in building pipelines over mountains and rough terrain. The deal is therefore likely to be commercially attractive to Gazprom as well.
In fact, this project is likely to be one of the key movers of trade relations between India and Russia which have normally involved military deals in the past. But India’s interest in Russia’s energy sector has witnessed an upward incline over the past few years.
India already has a 20% stake in the Sakhalin-1 oil and gas project. There is also a joint venture between ONGC Videsh and Imperial Energy Corporation in Tomsk, another energy project.
Other commercial tie-ups are also in the offing. During the recent visit of Russia’s president Dimitry Medvedev, Tata Sons was invited to participate in the Skolkovo Foundation, which is likely to become Russia’s equivalent of Silicon Valley.
In 2010, a joint venture between the Russian truck manufacturer Kamaz and Vectra group began assembling in Hosur its Kamaz-6540 dump trucks with a gross weight of over 25 tonnes. The joint venture plans to produce 30-40% of all components for these vehicles in India in the next 3-4 years.
Promtractor, a Russian tractor manufacturer, is also weighing a plant in India.
And a joint venture in Orissa for producing titanium products is in the pipeline.
The TAPI project is likely to become the biggest of such non-military business ventures between the two countries.
/\/\/\ If successful this pipeline will bring in lots of money to cash started Afghanistan and Pakistan as transit fee. They will be more than happy to let this project complete.Only concern for India will be guarantee that this pipeline will not be disturbed even during war.
If there's a full scale war, it will be disturbed. As its a war, everything would be tried. May be even during a Kargil style skirmish.
Yes, what could differ is the extent to which they'd disturb.
Our neighbors aren't angels kin are they?
I'm sure this bell rings in the mins of our diplomats too. But then you never know what energy needs desperation could lead you to.
Perhaps something could be worked out with Af-pak in the legalities of this treaty. The reason I include afghanistan is because pakistan may indirectly afflict the line in afghanistan to keep its own name clean. That they could try even without a war scene.
Pakistan will sign a legal document that will make sure they will be penalized financially and politically if they resort to such tactics. War is a completely different scenario where all bets are off.
I dont think India will not be signing a deal thats foolproof and can castigate pakistanis if they decide to break it . Any Ideas why Indo Iran pipeline deal fell through? It was because Iran was not ready to be come a party in case something goes wrong. Iran wanted to charge India on basis of Oil that it will pump into pipeline while India was ready to pay only after its delivery to us . I am sure In Tapi India will have enough safeguard to protect its intrests. Also money involved in transit fee will be very handsome for bankrupt pakistan and it will give them enough leverage to them . If Oils supply is stopped what do you think will stop India from either oversupplying Pakistan with water in return or undersupplying depending on season ?
My doubt remains. What if they resort to go the indirect/proxy way and damage it in Afghanistan to keep their names clean?
I mean looking at the Afghan situation today and the probable post US-exit scenarios, I don't think it will be impossible for our neighbors.
India has enough fuel reserve to easily overcome disruption for a day or two. Moreover we have various other sources of fuel supply as well. disruption pipeline for a day or two will not affect India at all . And by stabbing Afghanistan Pakistan will be bringing them closer to us despite doing nothing from our end. When you talk about sabotage dont you think they can sabotage various pipelines running in Indian territory as well.
Oh they've been stabbing afghans since a long time, to the extent of ruining that entire country. If only the afghans could see the trick in time (sighhhh).
And yes such a sabotage is possible in Indian territory as well but it is many many times harder here as compared to the brotherland of our neighbors.
Moreover, going with that logic nothing is safe anywhere in India - indeed.
bro...some of your points are valid but why are u saying as if are entire economy is dependent on it....if something goes wrong in Afghanistan done by pakistan dont you think there will be more hostilities between them-which is good for India in a way....
and we would decrease are own gas production done by reliance which means during war we can use are own gas in case they shut down are supply...
I know it won't be a national tragedy but so much for the divide and rule & clap that pakistan and afghans are fighting?
Aren't we paying a single dime for this deal. If you live with this headache forever, where is the win-win for India Russia then.
Be assured that in such a multi-party deal Afghans won't be the lone sufferers.
But I'm hopeful that the legalities of this deal would almost rule out any chances for the Pakistani state to think otherwise. What I'm doubtful of, are the lunatics roaming on both sides of the durand line who are no longer under Pak government or army's control.
Last edited by Virendra; 14-04-11 at 09:19 AM.