News // Transportation and storage
Saudi's Islamic Development Bank to offer $500 mln loan for TAPI project
07 December 2016 , 12:11Neftegaz.RU761
Saudi Arabia-based Islamic Development Bank had agreed to provide $500 million loan to part-finance the $15 billion Turkmenistan-Afghanistan- Pakistan-India (TAPI) natural gas pipeline project.
«An agreement to provide for the Islamic Development Bank (IsDB) extending a loan of $500 million to the TAPI project consortium was signed last month,» an official said here.
Also, TAPI Pipeline Co is in talks to rope in Saudi Fund for Development and the Japanese government as partners in the 1,814-km project that will transport gas from Turkmenistan's Galkynysh fields to Fazilka in India.
IsDB has expressed interest in financing the project not just on Turkmenistan's territory, but in Afghanistan and Pakistan, he said.
The long-delayed transnational pipeline was formally inaugurated on December 13. Turkmenistan's national oil company Turkmengaz is the leader of the consortium of national oil companies of the 4 nations. It has 85% equity in TAPI Pipeline Co (TPCL).
The state-owned gas utility GAIL India, ISGS of Pakistan and Afghan Gas Enterprise (AGE) have 5% stake each.
The TAPI pipeline will have a capacity to carry 90 million standard cubic metres a day (mmscmd) gas for 30 years, with 38 mmscmd going to India and Pakistan each. The remaining gas is to feed Afghanistan.
The project, to which ADB was appointed the transaction advisor in November 2013, had been planned to become operational in 2018, but it is unlikely to see the light of day before 2022.
The TAPI project has been on the drawing board for years as the 4 countries had not been able to get an international firm to head a consortium which will lay and operate the pipeline.
French giant Total SA had initially shown interest in leading the consortium. However, it backed off after Turkmenistan refused to accept its condition of a stake in the gas field that will feed the pipeline.
The official said the estimated cost of the project is $15 billion, according to an ADB-commissioned report. The project is to be funded in 60:40 debt-equity ratio.
The 4 nations to the project in April this year had signed an investment agreement in Ashgabad.
He said TPCL will appoint a project monitoring consultant (PMC) to conduct pre-FID activities, including mine clearance in Afghanistan, detailed route survey, front-end engineering design (FEED) and environment and social impact assessment.
The technical study of the TAPI project, done by Penspen, has estimated that it will take over six years to complete from the start of the FEED process, he said.
The Turkmenistan-Afghanistan-Pakistan (TAP) project was originally announced in May 2002.
India joined the consortium in 2008. In 2014, the pipeline consortium, TPCL, was incorporated.
TAPI will carry gas from Turkmenistan's Galkynysh field, better known by its previous name South Yoiotan Osman that holds gas reserves of 16 trillion cubic feet.
From the field, the pipeline will run to Herat and Kandahar province of Afghanistan, before entering Pakistan. In Pakistan, it will reach Multan via Quetta before ending at Fazilka (Punjab) in India.
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