Afghans want oil project to create 'energy corridor'

The $17 billion dollar Central Asian pipeline project could revive Afghanistan's economy said a state advisor, but security and political issues have deterred investors.

Afghans want oil project to create 'energy corridor'

World Bulletin / News Desk

Afghanistan could become an “energy corridor” in the next two years as the country could part-host a $17 billion pipeline project to transfer Turkmen gas to Pakistan and India, according to a senior Afghan official.

The Turkmenistan Afghanistan Pakistan India – TAPI – natural gas pipeline project was first proposed in the early 1990s with the purpose of transporting natural gas from Turkmenistan to India through Afghanistan and Pakistan.

However, ongoing security problems and a lack of upstream development opportunities have seen investors’ interest wane in recent years.

The pipeline would run for nearly 1,735 kilometers, including 735 kilometers across Afghanistan and another 800 kilometers through Pakistan. The pipeline will be designed to carry 33 billion cubic meters (bcm) of Turkmen gas annually.

“Afghanistan is a potential energy corridor. If TAPI is successful, there might be other similar projects going to India and Gwadar Port of Pakistan” says Shafiq Shahrani, advisor to the Afghan Minister of Mines and Petroleum.

“TAPI will boom the economy in energy-starved Pakistan” Shahrani told Anadolu Agency in an interview on Tuesday. “Meanwhile it will bring $1 billion in transit fees for Afghanistan per year. Afghanistan will buy about five billion cubic meters of gas per year” he added.

Afghanistan’s economy is dependent on external aid in order to reconstruct the state. The country has the biggest share of U.S. foreign aid, with receiving more than $100 billion since 2002.

The estimated start date for the project’s gas flow is 2017 but this could be postponed, according to Shahrani. “The estimated date is 2016 for start of pipeline construction,” he says adding that the cost of the project is estaimted at nearly $17 billion.


Securing such an important energy route through Afghanistan and Pakistan will present the project with many problems.

“Its not only economy, it’s also security because Afghanistan and Pakistan are located in mountain areas and securing this pipeline will not be easy” says Oktay Tanrisever, a Eurasian expert from the Middle East Technical University in Ankara.

“Partnership on security should be ensured. Pakistan, India and Afghanistan should partner for security of this pipeline.” Tanrisever adds. “This is more about a peacebuilding project.”

“The resolution of the conflict between Pakistan and India through this partnership will contribute to energy security of Afghanistan and the region in general,” he said. “This is a main challenge for Afghanistan energy security.”

So far, less interest has been displayed in the TAPI project after going to the market in 2012, but officials are hopeful for future revival in the project.

“The investors have shown less interest for building this pipeline due to not having stakes at the upstream development of this project,” Shahrani said.

“Currently, the Asian Development Bank is the transaction advisor for this project and is working to prepare all the documentation for going to the market once again,” he said.

“Meanwhile Turkmenistan doesn’t want any foreign companies to have stakes in upstream development inside their territory which is another reason [for] less interest shown by investors in this project.”

Afghanistan is also making investments on petrol and gas research activities. The Turkish Petroleum Corporation has a licence for petrol and gas research in two different regions of Northern Afghanistan, Mazari Sharif and Sandoqli blocks. The agreement, worth $150 million, was signed in October 2013.

“Turkey can be a key partner in infrastructure development especially in the energy field. Yet Turkish companies and investors in the energy field appeared less in the Afghanistan energy market,” Shahrani stated.

The Turkish private sector is mostly interested in costruction business in Afghanistan. In 2010, 140 of 190 Turkish companies in the country were licenced for construction, according to the Afghanistan Investment Support Agency.

Solving security issues in energy projects in Afghanistan could encourage the Turkish companies to invest more in energy business.

Güncelleme Tarihi: 16 Temmuz 2014, 15:20