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Viewing cable 08ISLAMABAD1684, NATURAL GAS PIPELINE FOR TURKMENISTAN, AFGHANISTAN,

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Reference ID Created Released Classification Origin
08ISLAMABAD1684 2008-04-28 06:28 2011-08-24 01:00 UNCLASSIFIED Embassy Islamabad
VZCZCXRO9313
RR RUEHLH RUEHPW
DE RUEHIL #1684/01 1190628
ZNR UUUUU ZZH
R 280628Z APR 08
FM AMEMBASSY ISLAMABAD
TO RUEHC/SECSTATE WASHDC 6677
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEHRC/USDA FAS WASHDC 4194
RUEHNE/AMEMBASSY NEW DELHI 3171
RUEHLO/AMEMBASSY LONDON 7783
RUEHML/AMEMBASSY MANILA 2978
RUEHBUL/AMEMBASSY KABUL 8499
RUEHAH/AMEMBASSY ASHGABAT 3379
RUEHKP/AMCONSUL KARACHI 9617
RUEHLH/AMCONSUL LAHORE 5369
RUEHPW/AMCONSUL PESHAWAR 4106
RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL
RHMFISS/CDR USCENTCOM MACDILL AFB FL
UNCLAS SECTION 01 OF 02 ISLAMABAD 001684 
 
SIPDIS 
 
SIPDIS 
 
E.O.  12958:  N/A 
TAGS: ENGY EFIN ECON EINV PREL PK IN AF TX
SUBJECT: NATURAL GAS PIPELINE FOR TURKMENISTAN, AFGHANISTAN, 
PAKISTAN AND INDIA: CLOSER TO REALITY? 
 
1. (U) SUMMARY. With the signing of a framework agreement in 
Islamabad on April 25, the Turkmenistan, Afghanistan, Pakistan 
natural gas pipeline project formally includes India as a partner 
and agrees to move forward quickly on implementation.  With 
construction scheduled to start in 2010 and completion in 2015, the 
proposed USD 7.6 billion, 1,680-kilometre pipeline project will 
supply 3.2 billion cubic feet of natural gas per day, with the 
majority going to Afghanistan and lesser but equal shares to 
Pakistan and India. END SUMMARY. 
2. (U) An Inter-Governmental Framework Agreement on the 
Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline 
project was signed April 25 in Islamabad. Petroleum ministers from 
the four member countries ratified the framework agreement pledging 
to begin construction of the proposed USD 8 billion, 1,680-kilometre 
pipeline project by 2010, and supply gas by 2015. Signatories to the 
agreement were Pakistan Minister for Petroleum and Natural Resources 
Khwaja Muhammad Asif, Turkmen Minister for Oil and Gas Industry Dr. 
Baymurad Hojamuhamedov, Afghan Minister of Mines Mohammad Ibrahim 
Adel, and Indian Minister for Petroleum and Natural Gas Shri Murli 
Deora. The signing ceremony was held at the conclusion of the second 
meeting of the Technical Working Group (TWG) and 10th meeting of the 
Steering Committee of Ministers, following two days of talks. 
3. (U) Indian Oil Minister Murli Deora formally requested that the 
steering committee permit India to join the pipeline project as a 
full member.  Pakistan, Turkmenistan and Afghanistan accepted his 
proposal.  The next meeting of the TWG and the Steering Committee 
will be held in New Delhi "at an early date but before the end of 
October." 
4. (U) Supply and demand: The Project will supply 3.2 billion cubic 
feet of gas per day.  Afghanistan, Pakistan and India presented 
their demand proposals to the steering committee.  Afghanistan 
proposed to off-take up to eight million cubic feet per day (mmcfd) 
in years 1 and 2, and up to 14 mmcfd of the 90 mmcfd allocated to 
the project starting from the third year. Pakistan and India agreed, 
in principle, to equally share the remaining volume between them. 
5. (U) Cost of the Project: The original estimate of USD 3.3 billion 
in 2002 has now risen to USD 7.6 billion, however the TAPI pipeline 
is still considered financially viable despite significant increases 
in project cost estimates due to sharp increases in the price of 
steel, construction costs, and the cost of compressor stations.  The 
parties agreed that a technical working group will formulate a draft 
sales and purchase agreement by December 31. Payment of transit fees 
to Afghanistan and Pakistan were reportedly not discussed at the 
meeting. 
6. (U) Pipeline Path and Timing: The 1,680 km, 56 inch diameter 
pipeline will start at the Dauletabad field in Turkmenistan and run 
to Fazilka at the Pakistan-India border, passing through Herat and 
Kandahar in Afghanistan and Multan in Pakistan. Construction work on 
the project would start in 2010 and gas supply would begin flowing 
in 2015. 
7. (U) Turkmenistan Gas Reserves: The Turkmenistan Minister 
confirmed that there are adequate reserves of gas in Turkmenistan to 
support the combined demand of the buyer countries for 30 years. 
Turkmenistan committed to share an audit report on the certification 
of gas reserves will be available by September 30, 2008. 
Turkmenistan also agreed to supply its internal gas specification to 
the parties within one month. Turkmen Minister Hojamuhamedov said 
that huge new gas reserves had been found, and the government is 
awarding the contract for certification of reserves of various gas 
fields to a British consultant by the end of this month.  He noted 
that Turkmen scientists determined that total gas reserves were 
eight trillion cubic meters (TCM) which would leave the Turkmen 
government with huge surplus reserves after meeting the demand of 
the TAPI buyers. 
8. (U) Additional Agreed Items:  The parties have also agreed to 
form a consortium of investors to undertake a detailed feasibility 
study.  The parties have also agreed to formulate a long term 
pricing mechanism which will be attractive to the buyers as well as 
the seller and will reflect the new market trends.  In addition, the 
Asian Development Bank agreed to review the feasibility study to 
ensure that it addresses potential investor concerns. 
9. (U) COMMENT:  Embassy Islamabad has compiled this information 
based on extensive media coverage in Islamabad from both television 
and print media.  A live television feed of the signing ceremony was 
carried on several local news channels amid great fanfare.  Embassy 
will follow up with the Minister of Petroleum and Natural Resources 
 
ISLAMABAD 00001684  002 OF 002 
 
 
to obtain further information as it becomes available. END COMMENT. 
 
PATTERSON