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Collective political will of participants bolsters TAPI
Ashgabat, 22 March 2013 (nCa) — The presidents of Turkmenistan, Afghanistan and Pakistan, in separate statements on 20 March, expressed strong support for TAPI, the pipeline project that would transport the Turkmen natural gas to Pakistan and India through the territory of Afghanistan.
The candid and well-timed reassurance by the three presidents alleviates the concerns that the start of work on the Iran-Pakistan (IP) pipeline may jeopardize the prospects for TAPI.
President Karzai, answering a question by nCa at a press conference Wednesday (20 Mar) in Ashgabat, said, “This project has our highest priority.”
He said, “TAPI is probably the most important economic project in the region, particularly for Afghanistan, Pakistan and India.”
“Afghanistan finds this project and the completion of the project as one of the very important interests of the country,” he added.
When asked by nCa whether Afghanistan had worked out some kind of system for the security of the pipeline during its construction and operation, Karzai said, “Afghanistan has all the requisite mechanisms for providing security and technical completion of the project.”
He explained, “As far as security is concerned, we have estimated the beneficiaries within Afghanistan. … And, we have found it in all aspects to be a feasible project and beneficial for not only Turkmenistan but also Afghanistan, Pakistan and India.”
President Berdymuhamedov, who was present at the press conference, added, “TAPI is a major and complex project. It is moving step by step toward implementation. All the issues are being addressed and taken care of in a timely manner.”
The Turkmen president mentioned, “The 21st meeting of the TAPI working group was held in Bangkok, 17-19 March, and the parties have agreed to establish a special purpose vehicle TAPI.”
“The next step would be the selection of the consortium leader and that would mark the beginning of the practical implementation of TAPI project,” the Turkmen president said.
President Asif Zardari of Pakistan, in a separate meeting the same day with the Turkmen president, also stressed the importance of TAPI.
He said that Pakistan attaches high priority to TAPI and would like to see it implemented as early possible.
Zardari repeated the same sentiments in his speech on 21 Mar at the Nowruz regional conference in Ashgabat, where he was one of the keynote speakers.
The question that is being raised by many in the western and Russian media is: Since the construction work has started on IP (Iran-Pakistan gas pipeline), does Pakistan need the volumes from TAPI (Turkmenistan-Afghanistan-Pakistan-India pipeline) also?
The backbone of this question is the either/or logic – Either IP can happen or TAPI but not the both.
Let’s deal with this question with the help of some rule-of-the-thumb kind of figures, not correct to the dot but quite close to reality.
What are the volumes we are talking about? — 33 bcm from IP and 16 bcm from TAPI (assuming Afghanistan doesn’t draw any gas from the pipeline). This comes to 49 bcm.
Can Pakistan consume 49 bcm of gas on its own, starting 2017?
The current energy consumption in Pakistan from all sources is more than 95 million ton oil equivalent (TOE).
There is big gap between the demand and supply of energy resources in Pakistan. While the experts differ on the exact size of the gap, one way to judge its severity is to remind that all the major cities in Pakistan go without electricity for 8-12 hours every day. The situation in smaller cities and villages is much worse.
Pakistan has a mature gas market and is the number one country in the world in CNG consumption. There are more than 3500 CNG filling stations and close to three million vehicles are running on CNG, thousands more being added every day.
Because of the shortage of CNG, the filling stations remain closed for two to five days every week in major cities.
The industrial sector, another major consumer of energy, goes idle for days together because of non availability of electricity and gas.
Taken together, it is easy to understand that the current consumption of 95 million TOE is not because there is no more energy demand in Pakistan; it is simply the limit of the energy resources available in the country.
Since we are talking of gas here, let’s convert 95 million TOE to gas equivalent: It would come to 104.5 bcm (billion cubic meters) – one million TOE = 1.1 bcm.
Of this consumption, 44 bcm is in NG and CNG (natural gas and compressed natural gas).
If we assume that the entire demand-supply gap must be met through the additional supplies of natural gas, where does it lead? We are building this assumption merely to see whether Pakistan can use 49 bcm of combined IP and TAPI volumes in addition to what it has already.
The current power generation capacity in Pakistan, both public and private sector, is about 20000 megawatt. Some analysts say that Pakistan is currently facing a shortfall of 6000 megawatt but this seems a widely inaccurate assertion, probably taking into account the situation in the major urban centres only. This estimate seems to disregard the electricity shortage faced by the industrial sector and also the small towns and villages where more than 70% of population of Pakistan lives.
The nCa estimates are that Pakistan would need to add another 20000 megawatt capacity of power generation within the next seven years to meaningfully address the crisis.
A modern gas-fired plant needs to burn 200 cubic meters of natural gas to produce one megawatt hour of electricity. If we are talking of doubling the power generation capacity of Pakistan solely by adding gas-fired turbines, it would need 35 bcm of gas to run them at full capacity.
Then, there is the CNG sector, mostly the automobiles and cottage industry. This sector would need 9 bcm of gas by 2015. The current situation, as said earlier, is that not even half the demand is being met; which means that the CNG sector would require at least 6.5-7 bcm of additional supplies to keep up with the demand.
Add this to 35 bcm of extra volumes that we need for power generation, and it comes to about 42 bcm.
Then, there is the agriculture sector. Pakistan is a major agriculture country, with about 70% of population drawing sustenance from land. Urea is the main fertilizer to keep the soil productive. It takes about 930 cubic meters of gas to produce one ton of Urea.
If we assume that three million tons of extra urea would be required to serve the fields properly, it means that about 2.8 bcm of additional gas would be required to run the new urea plants.
Taking it together with the earlier figures (35 bcm for power generation and 7 bcm for CNG sector) we can see that Pakistan requires about 45 bcm of imported gas to equalize its energy equation. This is the short term requirement. The future projections must rise substantially and steadily.
The economic growth of Pakistan remains stunted for want of energy resources. The current growth rate of GDP is in the zone of 4% but there is the unanimous opinion that the economy of the country has the potential of sustained growth of about 9% or more annually.
This additional 5% in growth must come in proportion to availability of energy resources. At the current rate of consumption, it means that Pakistan must find additional energy resources of 4.75 million TOE, cumulative for each passing year, to let the economy grow at its full potential. This amounts to 5.3 bcm of new gas supplies each year, adding to what is being consumed already at the end of each year.
Given no drastic and unforeseen downturn, the combined supplies from IP and TAPI would not be enough to meet the energy demands of Pakistan in the ten years from now.