OIL PIPELINE NEWS (OIL /GAS) - CENTRAL ASIA
OIL PIPELINE NEWS (OIL /GAS) - CENTRAL ASIA
Monday, July 24, 2006
Turkmenistan To Suspend Gas Exports To Russia
(RFE/RL)
July 24, 2006 - Turkmenistan today said it would temporarily stop shipping natural gas to Russia due to planned repair work on its main export pipeline.
Turkmenistan's Oil and Gas Ministry says in a statement shipments would be halted starting from July 25 for eight days, reducing the country’s overall daily gas exports by up to 80 million cubic meters.
The ministry says the suspension for repair work was requested by Gazprom, the Russian gas monopoly that operates the Central Asia-Center-IV pipeline that links Dowletabat to Russia via Uzbekistan and Kazakhstan.
There was no immediate confirmation from Gazprom.
Turkmenistan's Foreign Ministry warned on June 29, after a suspension of talks on gas deliveries to Russia, that supplies would be cut off in September if Moscow and Ashgabat fail to reach a new import deal.
The Soviet-era Central Asia-Center-IV pipeline has an annual capacity of 44 billion cubic meters, and Gazprom has reportedly said that it wants to nearly double that.
Russia relies more and more on Turkmen gas to meet demand from third countries.
Copyright (c) 2006. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036. www.rferl.org
July 23, 2006
Iran Says Pipeline Deal With India In Trouble
(RFE/RL)
July 23, 2006 -- Iran's Foreign Minister Manuchehr Mottaki said today that the possibility of extending a gas pipeline between Iran and Pakistan to India has run into trouble.
Mottaki was not specific, but media reports say that the problem is the price of gas, with Iran wanting almost twice as much as India is prepared to pay.
The proposed pipeline is scheduled to come into operation in 2011.
(AP)
Oil and Gas Powering Double Digit Growth for Azerbaijan
BAKU, AZERBAIJAN -ADB - (6 April 2005) - Azerbaijan's economy is expected to accelerate, with major oil and gas projects fueling real gross domestic product (GDP) growth, at double-digit levels over the next few years, according to a major ADB report released today.
Following the 10.2% growth registered in 2004, Azerbaijan's real GDP growth is expected to soar to 14.5% in 2005, 19% in 2006 and 22% in 2007, says the Asian Development Outlook 2005 (ADO), the annual ADB flagship publication that forecasts economic trends in the region.
"The medium-term outlook for the economy is very positive, with the main driving force switching from investments in the oil sector to resultant production and export," the report says.
Construction of the Shah-Deniz gas field and its pipeline as well as further development in the ACG oil field will continue to energize the construction sector, which has more than quadrupled in size during the past three years. The pace is likely to be maintained in the coming years as the Government rehabilitates the east-west and the north-south road corridors.
The authorities are expected to maintain prudent fiscal and monetary policies over the medium term. With world oil prices likely to remain firm, the earlier deficit projection of less than 2% of GDP is likely to hold in spite of wage and pension increases and an ambitious public investment program.
With greater foreign exchange inflow coming from the oil sector, the central bank will have difficulty in managing price stability. The efforts of the National Bank of Azerbaijan to avoid a nominal appreciation of the exchange rate, coupled with the thin Treasury bill market, had earlier led to an unsterilized accumulation of foreign assets and rapid expansion of the money supply.
Despite introduction of new monetary tools, inflation is likely to range from between 4.0% and 5.5% during the three-year period, higher than the 5% inflation rate projected by the central bank for 2005, and lower to 2% to 3% for 2006 and 2007.
The current account position will shift from a deficit of 30.7% of GDP in 2004 to a surplus of 4.5% of GDP in 2007. Overall, the Government will be able to amass foreign reserves in the medium term and external debt will remain low, ADO says.
Despite recent economic growth, the country's poverty rate remains high at 46.7%, based on monthly minimum consumption needs of food and nonfood items of $36 per person. Urban areas suffered higher poverty rates than rural areas, due to local migration to the cities.
Official unemployment rate remained low in 2004 at around 1.5%, but this figure includes only individuals registered for unemployment assistance. The State Statistical Committee carried out a labor force survey in 2003 following international standards, showing the unemployment rate at 10.7%, with the urban rate double that of rural areas (14% versus 7%).
The move to diversify Azerbaijan's economic set-up will hinge on how effective the Government is in implementing the structural reform agenda, the report says. Financial sector reforms are a good start, but more work lies ahead if the authorities are to foster an economy with a diverse production base.
Governance reforms, including the implementation of an anti-corruption law that was passed in January 2004, and simplification of business paperwork requirements are needed to help local business develop and attract foreign capital to the non-oil sectors.
Pakistan Conference: Regional Gas Pipelines [Politically] Possible?
Pakistan Oil and Gas Conference 20041 Are Regional Gas Pipelines
[Politically] Possible?
Presented by
Dr. Naved Hamid
Senior Economic Advisor
Pakistan Resident Mission
Asian Development Bank
4 May 2004
Islamabad, Pakistan
Mr. Chairman, ladies and gentlemen:
ADB - May 4/04 - I would like to thank the Petroleum Institute of Pakistan and the Mediators Conferences for organizing the Pakistan Oil and Gas Conference 2004 after a gap of nearly four years. Four years is a long time in a dynamic sector such as energy where resource availability is as much subject to the vagaries of nature as to political risks. However, as I ponder the ramifications of the topic at hand "Are Regional Gas Pipelines Possible", I cannot help but be impressed at the progress that has been made in the last half decade or so in making the dream of transporting energy resources, specifically gas in the Asian region, without hindrances of political borders, a step closer to reality.
Before going into greater details on the progress that has been made, I would first of all like to identify some of the negative opinions prevailing against regional gas pipelines across Asia. The theme of these opinions remains the same: "large political differences" will not let transnational pipelines succeed. Over the last decade I have not heard any other argument against the idea of transnational pipelines. I wish, therefore, to talk today on the topic of trans-Asia pipelines fully appreciating the fact that there are political differences in the region. However, in view of the differences, can the business of supplying natural gas through pipelines traversing 2 or 3 countries, or even a gas grid of transnational pipelines develop in Asia?
Let us first look at the various pipeline options that are available today for either import or export of gas in South Asia. Amongst the countries in South Asia, India will be the main importer of gas with Bangladesh and Myanmar as potential exporters. Pakistan's territory could be used to transmit gas from energy surplus Central Asian States. By 2012, Pakistan could also be an importer of gas.
I would first of all like to talk about the Turkmenistan-Afghanistan-Pakistan pipeline (TAP). Over the last couple of years there has been considerable interest on the development of this Project that can transport 2.5 billion cubic feet of natural gas up to India. The Governments of Turkmenistan, Afghanistan, and Pakistan have formed a Steering Committee comprising the Petroleum Ministers of the 3 Countries to progress the project and the 3 countries have invited the Asian Development Bank to act as the lead development partner for the project. The ADB has supported a feasibility study through a grant of $ 1 million that is nearing completion. A Gas Pipeline Framework Agreement has been concluded among the 3 countries confirming their commitment to the Project. In addition the 3 countries have agreed to the following:
To establish a consortium led by one or more major international oil and gas companies or leading gas transmission companies. The consortium will design, finance, construct and operate the pipeline.
The 3 governments will provide land and free movement of goods, materials and personnel for the construction and maintenance of the pipeline.
The consortium will be responsible for the transmission of the gas and will be paid a tariff in accordance with a negotiated gas price. Each country will confirm the quality of gas it will use from the pipeline for its own consumption.
No taxes, royalties, value added tax, duties or other payments will be levied for activities directly related to the Project.
The TAP Project consists of a gas pipeline of about 1,700 kms that can transport upto 30 billion cubic meters of natural gas annually from the Daulatabad fields in Southeast Turkmenistan to consumers in Afghanistan, Pakistan and possibly India. In order to progress the Project the Steering Committee held a series of meetings. Two routes for the pipeline were considered; the Northern Route through Mazar Sharif and Kabul in Afghanistan and Islamabad and Lahore in Pakistan and the Southern Route through Herat and Kandahar in Afghanistan and Quetta and Multan in Pakistan. The Sixth Steering Committee Meeting held in June 2003 chose the Southern Route to be surveyed and studied in detail first. The final cost of the Project is estimated at $2-2.5 billion.
Regarding the demand for gas, it is estimated that Pakistan's shortfall by 2010 will be 0.2 billion cubic feet per day (bcfd)., going up to 1.4 bcfd by 2015 and 2.7 bcfd by 2020. Similarly, the gas demand figures conveyed by Afghanistan indicate a shortfall of 0.3bcfd by 2010 going up to 0.9 bcfd by 2015. The Project appears feasible based on a moderate growth rate projected for Pakistan, supplemented by some demand for Afghanistan. This however needs to be established on the basis of further work to be undertaken by the Consultant. India, should it agree to participate in the Project, of course has a huge requirement. The TAP pipeline can supply a very large quantity at competitive prices. Under ADB's Technical Assistance for the Project, it is also proposed to evaluate the potential for underground gas storage reservoirs in Pakistan. This study is likely to be completed by September 2004. Utilization of this potential will help counter unforeseen disruptions and shortages.
There are of course risks that need to be addressed to make the project viable and successful. These pertain to gas supply and markets; the legal and regulatory framework; and, the formation of the consortium. There are also political risks. I will talk about some of these risks here.
The Gas Supply and Market Risks: An independent auditor needs to certify the gas reserves of the Daulatabad gas field. The Project will also need confirmed markets for the gas to confirm financial viability of the pipeline. While there is a market in Afghanistan and we anticipate a reasonable demand from Pakistan, the figures need to be firmed up. Should India at some point agree to participate in the Project, this would substantially increase the size of the potential market.
Legal and Regulatory Framework: The Host Country Agreements between the partners have to be comprehensive. They will need to clearly define the basic legal and regulatory framework within which the consortium will operate. ADB has already prepared a draft which is under finalization at the present time.
Consortium Formation and Financing: The structure and participation in the pipeline consortium and its subsidiary companies should be agreed by the participating companies. Financing of the pipeline has to be arranged in principle and the financing required for the development of the Daulatabad field secured.
Gas Sales and Purchase Agreements. These must be finalized. ADB has prepared drafts, which are being reviewed by the governments.
Security Issues: The concerned governments will have to ensure the smooth running of the pipeline and its protection from unlawful elements.
I have talked of the issues and risks pertaining to the TAP Project here since these would be common to most pipeline projects. We believe the issues and risks can be addressed.
I would now like to look at other pipeline possibilities.
Iran - Pakistan - India Pipeline Project: In January 2003 the Government of India signed an MOU with the Islamic Republic of Iran to establish joint ventures to invest in oil and gas projects in Iran and India. One of them is the Iran-India natural gas pipeline. There are 3 options to build this pipeline.
It can be built over land crossing Pakistan and entering western Rajhastan covering a distance of roughly 2,600 kms.
A pipeline can also be built adopting the offshore route outside the territorial waters of Pakistan. Under the Law of the Sea, confirmation for building such a pipeline is required from Pakistan since it passes through the Exclusive Economic Zone of Pakistan and permission is required from Pakistan to conduct surveys in its waters. Moreover the coast offshore of Iran and Pakistan exhibits seismic activity because of plate movement that raises technological hurdles.
While a pipeline can also be build through the deep waters of the Indian Ocean avoiding the Pakistan Economic Zone this entails a much higher capital cost and also technical problems.
So the most feasible option is the over-land route. The Government of Iran wants the $3 billion pipeline to be completed in two phases. Under Phase_I the gas pipeline would be completed from Iran to Pakistan and then under Phase II from Pakistan to India in case of willingness of India. The issue is currently under negotiation between the Governments of Iran and Pakistan.
Qatar - Pakistan Gas Pipeline: There is a renewed interest by the Government of Pakistan in the Qatar-Pakistan Gas Pipeline Project worth $2.7 billion, which will deliver Qatar gas through a 1,600-km pipeline to Pakistan. The Project is currently under negotiation between the Government of Pakistan and Crescent Petroleum of UAE. The Project could supply 1.6 billion cubic feet to Pakistan.
In the context of other pipelines in Asia, the proposed Sakhalin pipeline, coming from the Sakha gas fields in Russia with possible exports to Japan and to China is likely to have a significant impact on future gas business in Asia and the Middle East. Initial supplies to Hokkaido, Japan, are expected by 2008 with an extension of the pipeline to Tokyo in the same year. The pipeline can transport natural gas in large quantities to Japan for an extended period of time, as the combined reserves of the three gas fields are estimated at 17 trillion cubic feet (equivalent to 485 billion cubic meters). It is likely that Sakhalin 2 will look at exports to South Korea. In all probability this pipeline will become a reality within this decade.
In addition there are a host of gas pipelines proposals being developed across Central Asia. In late 1992, the Chinese pipeline company CNPC together with the Japanese trading house Mitsubishi visited Turkmenistan to propose what became known as the Energy Silk route pipeline bringing gas from Turkmenistan to China, Korea and Japan. This proposal is yet to develop further. Again, since the mid 1990s Chinese companies have been active in investments in Kazakh fields with the intention for building oil and gas pipelines to China. The question here is basically whether Central Asian sources can and will present themselves as being cooperative rather than competitive, and win over the Asian markets.
It is therefore clear that there are a large number of options/projects/plans that can be developed for trans-national pipelines in Asia. The fact that they have not yet reached fruition, gives rise to the topic we have before us today-can these proposals be translated into reality or will they remain only just on paper?
Let us consider the reasons why these pipeline projects have not taken off. Is this just because of political compulsions of the various countries that are concerned, or are there other historical/economic/technical reasons that have possibly delayed these projects.
In the context of South Asia, the one singular reason often quoted is the sensitive Indo-Pak, and Indo-Bangladesh relations. In the case of exports from Central Asia, the most quoted reason is the perceived difficulty in doing business with countries emerging from the old soviet system.
Let us first take a look at the political context in South Asia today. Recently, there have been signs of greater stability returning to South Asia. The recent SAARC Summit held in Islamabad, the thaw in India - Pakistan relations accompanied by various confidence building measures like the resumption of communication links and greater stability in Afghanisan, as the country slowly rebuilds are some notable developments that augur well for the future of regional gas pipelines.
The World gas scenario has changed rapidly in the last decade. Natural gas has come a long way from being a "not-in-demand" product. It is today the fastest growing primary energy source. The natural gas share of total energy consumption is globally expected to increase from 23% in 2001 to 28% by 2005. And the most robust growth in demand is expected to take place in developing countries where the overall demand will rise more than what it will in the developed countries. Suffice to say that much of the demand will come from India and the People's Republic of China, which currently have very low per capita gas consumption as compared to consumption levels in the more industrialized and developed countries. In the case of Pakistan, as Pakistan's population grows and known gas reserves are steadily used up, the demand for gas will steadily outpace the supply of domestically produced gas. Under a moderate GDP growth rate scenario of 3.8%, Pakistan's estimated shortfall by 2010 is 0.2 billion cubic feet per day (bcfd)., going up to 1.4 bcfd by 2015 and 2.7 bcfd by 2020.
In conclusion I would like to state that, firstly, the above efforts have been accompanied by technological innovations that have made possible the delivery of gas across countries possible in the first place at reasonable cost. Secondly, there have been changes in regulatory regimes enabling freer participation by the private sector as the public sector unbundles activities it carried out previously. In the context of Pakistan, the formation of the Oil and Gas Regulatory Authority, ORGA, as an independent regulator for the industry as well as the deregulation of prices of petroleum products are examples. Country-to-Country interactions have introduced changes in the way countries do business with each other. Areas of sovereign domain in extraction, refining and distribution of energy resources have given way to intelligent perceptions of new economic realities where counties now realize that the driving force in the new World order will be growth and development. I believe that during the course of this decade some of the planned transnational pipeline proposals will come to fruition. In the "chicken or egg case" of whether there should be a resolution of political issues first or whether economic development will come first, I believe, the winner will be economic growth and development.
The ADB remains committed to the cause of poverty alleviation and economic growth. To this end we believe that transnational gas pipelines will play a large role in enhancing regional cooperation and contribute significantly to economic growth. They will provide cheaper and cleaner energy; generate income that can be used for addressing poverty; and promote regional security.
Thank you once again for inviting me to speak at this important conference.
______________________________
1This presentation was made by Dr. Naved Hamid, Senior Economic advisor on behalf of M. Ali Shah Country Director Pakistan Resident Mission at a conference on " Pakistan Oil & Gas Conference 2004" jointly organized by The Petroleum Institute of Pakistan (PIP) and The Mediators Conferences on 4 May 2004 at Marriott Hotel, Islamabad.
htp://www.adb.org/Documents/Speeches/2004/ms2004017.asp
Steps Towards Pakistan Pipeline
Study to Identify Gas Reservoirs in Pakistan for Pipeline Project
MANILA, PHILIPPINES (27 February 2004) - ADB - ADB has approved a US$700,000 technical assistance (TA) grant for a study to locate natural gas reservoirs in Pakistan in the event of supply disruptions in the planned Turkmenistan-Afghanistan-Pakistan (TAP) gas pipeline project.
The TAP Natural Gas Pipeline Project is a 1,700-kilometer pipeline that will transport up to 30 billion cubic meters of natural gas annually from the Dauletabad fields in South East Turkmenistan to consumers in Afghanistan, Pakistan, and possibly India. The $3.3 billion project, to take five years, will begin after the countries involved and other partners have finalized various project agreements.
Underground reservoirs are proposed for Pakistan to store sufficient quantities of natural gas in case of any disruption - for example, through political action or sabotage - of supply through the pipeline.
"Gas demand in Pakistan, particularly in the north, is subject to major seasonal variations," says Najeeb Jung, and ADB Senior Energy Specialist. "During winter, gas supply is limited because of the increased demand for power generation in domestic heating. The situation is aggravated by reduced hydropower generation. Underground storage would help prevent such shortages."
The TA will identify possible reservoirs based on size, containment capacity, productivity, and location. The short-listed reservoirs will undergo a more detailed evaluation. Other facilities needed to integrate the reservoirs with the gas infrastructure will also be evaluated.
Cost estimates and implementation schedules to develop and integrate the selected reservoirs will be prepared.
The TA will also provide legal advisory services to help the governments finalize the various project agreements, and disseminate information about the project among major oil and gas transportation companies to facilitate bid solicitation.
ADB has previously financed a techno-economic feasibility study for the pipeline project, a market study on demand for natural gas in Pakistan and northern India, and a risk analysis and risk mitigation study on concerns of consumers in case gas supply is disrupted. This TA is a follow-up to the latter study.
The TA is due for completion in October 2004. The Government of Pakistan will contribute US$125,000 equivalent toward its total cost of US$825,000.
Oil and Gas Ministers to Discuss Central Asian Gas Pipeline Project
MANILA, PHILIPPINES (7 April 2003) - The oil and gas ministers of Afghanistan, Pakistan, and Turkmenistan will gather in the Philippine capital for the Fifth Steering Committee Meeting to discuss the Turkmenistan-Afghanistan-Pakistan Gas Pipeline Project (TAP Project) on 8-9 April 2003.
The meeting will consider the report on the market study for Turkmen gas in Pakistan and northern India. The Steering Committee will discuss key issues relating to the structure and the salient points of various agreements being drafted as part of ADB assistance to the project. The drafts include the Host Country Agreement, Transport Agreement, and Gas Sale and Purchase Agreement.
The Manila meeting will also consider the way forward and future plans, including a formal invitation to India to participate in the TAP Project.
"The 1,600-kilometer gas pipeline project to transport up to 30 billion cubic meters of natural gas annually from the Dauletabad fields in southeast Turkmenistan to consumers in Afghanistan, Pakistan, and possibly India has significant potential for enhancing stability and improving living standards in South and Central Asia," said ADB Director-General, South Asia Department, Yoshihiro Iwasaki.
He said the project would provide cheaper and cleaner energy to consumers, generate income that could be used to enhance public services, and contribute to regional stability. Lessons gained particularly on regional integration and cooperation can set a precedent for developing other large-scale infrastructure projects that would connect the countries of Western Asia.
"The TAP Project can also demonstrate to the nations of Western Asia that a major cross-border initiative can be launched if there is strong political will and commitment to move forward," said Muhammad Tusneem, Director-General of ADB's East and Central Asia Department.
In May 2002, the heads of state of Afghanistan, Pakistan, and Turkmenistan met in Islamabad, Pakistan, to discuss the possibility of constructing a major gas pipeline project. A Steering Committee, comprising oil and gas ministers from the three countries was formed to oversee the TAP Project.
In July 2002, ADB was invited to the first Steering Committee Meeting held in Ashgabat, Turkmenistan, and was requested to act as lead development partner and help prepare the feasibility study for the project. Since then, ADB has been actively involved in developing and processing the TAP Project.
The second and third Steering Committee meetings, held in Kabul in September 2002 and in Ashgabat in October 2002, respectively, discussed the Terms of Reference (TOR) for the feasibility study and the draft framework agreement prepared by ADB. In December 2002, ADB approved a US$1 million technical assistance grant for undertaking a technical feasibility study of the project.
Subsequently, the Heads of State met in Ashgabat on 27 December 2002 and signed the Framework Agreement, initiated by the Committee at its third meeting. The fourth Steering Committee Meeting, held in Islamabad in February 2003, discussed a preliminary risk analysis conducted by ADB and possible mitigation measures to enhance the commercial attractiveness of the TAP Project. The fourth meeting also agreed to invite India formally to join the TAP Project as a major purchaser of the gas and also possibly as an investor.
Asian Development Bank - Funding India
ADB Approves US$150 Million Loan For LPG Pipeline Project In India
ADB - 1997 - The availability of Liquified Petroleum Gas (LPG) in northern India will be improved by a US$150 million loan approved today by the Asian Development Bank.
The LPG Pipeline Project will construct a pipeline system to transport LPG from the western to the northern region of India. It offers the least-cost method for transporting LPG over long distances, improves the reliability of LPG supply and reduces greenhouse gas emissions.
The pipeline system will consist of a 1,015-kilometer trunk line and a 156-km. feeder line; pumping facilities at a dispatch station and three booster pump stations; supervisory control and data acquisition system; a telecommunication system; and human resource development. The pipeline will have an initial capacity of 1.7 million tons per annum (MMTPA) and will support the required movement of LPG from the ports and local production centers to inland areas.
The total cost of the project is US$364 million equivalent , of which the Gas Authority of India Limited (GAIL), as the executing agency, will shoulder US$146.8 million equivalent while US$8.8 million equivalent will be raised from local banks. It is expected that the ADB will assist GAIL in arranging parallel cofinancing from international commercial banks to finance the balance of the foreign currency cost of US$58.8 million, its first internationally syndicated commercial loan.
The US$150 million ADB loan will come from the Bank’s ordinary capital resources with a repayment period of 15 years, including a grace period of 4 years, with interest determined in accordance with the Bank’s variable lending rate system for US dollar loans.
The project has strong environmental and social benefits. The LPG users will benefit from the enhanced availability of clean, convenient and efficient domestic fuel that produces lower greenhouse gases than competing fuels. The environment will also benefit from the absence of significant amount of vehicular emission and inhalable particulate matter that would result from the use of over 3,000 road tankers in the absence of the project.
htp://www.adb.org/Media/Articles/2003/1961_Central_Asia_Oil_and_Gas_Pipeline_Project/default.asp