Turkmenistan is a
country that has least number of emigrants travelling to Russia and Kazakhstan.
This equally true for immigrants as well. Being less dependent on the remittances
to drive its economic growth, it has successfully navigated the pressures and
maintained neutrality in the great power rivalries. Turkmenistan is neither a
member of China led SCO nor it is a member of EaEU.
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Russian led Eurasian Economic
Union (EaEU) is believed to be Putin’ strategy to ‘Re-Sovietize’ the region
one again. After Russian aggression in Ukraine in 2013 and Georgia in 2008,
Central Asian countries are concerned about Putin’ muscle flexing policies. This
is particularly the case, after USA has decided to retreat itself from this
geopolitical theatre i.e. Eurasia.
Thus, Putin’ policies
in Eurasia can be summarized as such that it is not supposed to be sidelined
but rather taken seriously. Russia cannot to become a peripheral country in
Eurasia, when it comes to decision making process in Eurasia.
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With the fourth-largest gas
reserves in the world, Turkmenistan is also vital energy hub. The Caspian region
of Turkmenistan is endowed with huge oil and gas reserves. Turkmenistan has gas
sales arrangement with Russia and China.
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Russia is the largest
supplier of gas to European countries and wants to maintain its monopoly in European
markets. Russia uses this dependency of European countries upon its gas as a
weapon.
Russia’ policy to buy
Turkmen gas and connect it with its own pipelines is to avoid competition in European
markets. Europeans use natural gas for heating purpose, and they are
overwhelmingly dependent on Russian government owned gas company GazProm.
China’ policy to
import oil and gas from Caspian basin and Eurasia is to reduce its dependence
on Malacca strait.
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However, because of this
prolonged neutral stance on issues that concern Russia and China, it also risks
isolation. Additionally, Turkmenistan (and Uzbekistan) do not share border with
Russia. Remoteness from Russia has helped Turkmenistan shield from Russian
interference.
At the same time,
Eurasian counties are share an anxiety about China’ ascendency. They are overdependent
on China as a major source of FDI. Coupled with increasing debts from China,
they are wary about China’ growing influence in their domestic affairs. India
should take these events seriously as increasing Chinese footprint under the
Silk route initiative can also evolve the region in a way that can be to the
disadvantage of India.
Central Asian countries
have therefore adopted a ‘Multi-Vector policy approach’ to diversify their
engagements with other emerging market economies and countries whose voice hold’s
credible weightage at global levels (USA, France, Germany etc.) One among these
countries is India.
Why Turkmenistan is
enthusiastic about TAPI pipeline?
With energy consumption increasing
in India driven by the ambitious program of Narendra Modi led government to
provide cleaner fuels to the people, the appetite for natural gas and cleaner
fossil fuels is increasing in India (and therefore TAPI pipeline). Currently,
the bulk of oil and gas comes from West Asia which is highly volatile. India
therefore wants to diversify its sources of oil and gas for which Central Asia
and Australia are becoming increasingly important. (Eurasian countries
producing O&G are not members of OPEC. Hence any negotiation with them will
obviously be driven by national interests and not prevailing market rates that
is mostly controlled by large exploration companies)
At the same time, the
Eurasian countries will also be able to diversify their consumer base. Afghanistan,
Pakistan and India need natural gas to maintain or improve their economic
growth rates. These consumer countries are thereby creating a new ‘Southern gas
corridor’. Diversification of consumer base will act as a backup for these
countries that are becoming increasingly dependent on either China or Russia as
a source of investment.
The original project for TAPI started
on March 15, 1995 when an inaugural memorandum of understanding between the
governments of Turkmenistan and Pakistan for a pipeline project was signed. The
project didn’t start due to the instability caused by Taliban the proposed
pipeline passes through Afghanistan. In April 2008, Pakistan, India and
Afghanistan signed a framework agreement to buy natural gas from Turkmenistan.
In 2010, an intergovernmental agreement was signed to begin the work. The
Turkmenistan-Afghanistan-Pakistan-India Natural Gas Pipeline (TAPI) Project
aims to export up to 33 billion cubic meters (bcm) of natural gas per year
through a proposed approximately 1,800-kilometer (km) pipeline from
Turkmenistan to Afghanistan, Pakistan and India.
However, issues like political
instability in Afghanistan, agreement over pipeline transit fees and consortium
have stalled the progress. The cost in building the pipeline is estimated to be
about $10 billion, which too has become a stumbling block. Added to this, is
the lack of a foreign commercial partner for the project.
Look
at the map. Turkmenistan cannot sell gas directly to Azerbaijan because they
do not share a border. So how does Turkmen gas reach Azerbaijan?
Iran
and Turkmenistan have an energy swap agreement to supply gas to Azerbaijan. The
Korpeje Kordkuy pipeline supplies gas to Northeast
Iran and Iran supplies an equal amount to Azerbaijan. This gives options for Ashgabat
to sell gas to Armenia, Azerbaijan or even further afield.
Can India use this
strategy?
If Iran and
Turkmenistan agree, we can make a deal wherein Turkmenistan supplies gas to Iran
and Iran ships an equal amount to India, thereby virtually bypassing Pakistan
and Afghanistan involved in the TAPI pipeline project.
Turkmenistan wants to
maintain ownership under itself which no private company would like to allow. Thus,
foreign companies can only participate if they partner with state owned
companies.
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In TAPI consortium,
each country is represented by state companies such as Turkmengas
(Turkmenistan), Afghanistan gas company, ISGS (Pakistan) and GAIL (India)
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When ADB gave the first report
regarding the scope of this project, it had mentioned that the gas is in
Dauletabad. However, later it was found that more significant volumes can be
explored at Galkynsh where China enjoys an upper hand by virtue of the
investments it has already made. Lastly, with Turkmenistan willing to export
this gas to EU markets as well, there is a considerable doubt if anything will
remain for India when it reaches to our borders.
This project, if
implemented, will not only diversify India’s energy import basket, but also
lead to de-escalation of conflict between India and Pakistan.
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Pipeline is a part of
critical infrastructure. To avoid disruption, the countries have decided to
build underground strategic reserves so that the latter country doesn’t have
to wait. By the way, Pakistani engineers have enormous expertise in repairing
pipelines in that are sabotaged by terrorist elements. (Experience is the
best teacher and frequent practice like this makes them so much competent!!!)
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The latest development is that the
Turkmen President has ordered state companies Turkmengaz and
Turkmengazneftstroi to begin building the Turkmen section of the pipeline, the
Turkmen state media reported in November 2015.
Some reserves of oil
have also been found in northern part of Afghanistan. In future, if any surplus
gas is found in Uzbekistan, both Uzbekistan and Afghanistan can also be
connected with the proposed TAPI pipeline.
Bangladesh has also
shown interest in TAPI pipeline.
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Turkmenistan suffers
from many economic challenges that includes lack of decent employment opportunities,
corruption, unfavorable investment climate coupled with authoritarian
political system.
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It is believed that TAPI,
CASA 1000 project, TUTAP will act as building blocks for political
reconciliation and regional integration among these competing countries as
their interests are now overlapping with each other to transport energy from
resource rich to resource poor countries.
Turkmenistan,
Uzbekistan and Kazakhstan are rich in fossil fuels. Kyrgyz and Tajik are
resource rich in terms of potential for hydroelectricity. On the same
parameters, Afghanistan and Pakistan resource poor since they lack continuous
access to electricity.
What is regional
integration?
This includes
connecting countries through hard and soft infrastructure in a such a way
that all together they act like a single unit (i.e. single market). This can
be done through consolidation and harmonization of customs, border
inspection, taxes and standards so that goods, energy, electricity, data and
commodities (minerals extractives and agriculture products) transit to and
from without stopping or standing for want of compliance. (Digital traffic is
a metaphor for economic activity)
Even though both Uzbekistan
and Turkmenistan are immediate neighbors, there no direct flight between their
capitals viz. Tashkent and Ashgabat. This shows the level of distrusts and
disintegration in Eurasia.
Central Asian
countries are now joining WTO. This will help to streamline customs
procedures and other business laws.
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Does TAPI compete with
IPI?
India’ appetite for gas
is so much large that both the pipelines will be able to enjoy a sizeable
market share.
Why Russia supports IPI?
Iran wants to extend
Iran Armenia Trans Anatolia gas pipeline (TANAP) to Europe. This project is now
completed. Next will be Trans-Adriatic Pipeline (TAP) and once it is finished, both
Iran and Azerbaijan will be exporting their own gas to Europe via Turkey. The Russians
do not want the Iranians to encroach their own markets. By diverting this to
South and towards India.
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