Singapore (Platts)--4Mar2011/542 am EST/1042 GMT

The Asian Development Bank is optimistic that the 1,800 km (1,116 miles) Turkmenistan-Afghanistan-Pakistan-India gas pipeline project will begin operations by 2016-17, despite the many looming uncertainties.

An ADB official said Thursday that the bank hopes that construction of the pipeline will be completed and natural gas deliveries will start by 2016-17.

The pipeline is to deliver up to 38 million cubic meters/d of gas each to Pakistan and India, and up to 14 million cu m/d to Afghanistan.

"The timing is very tight," Pil-Bae Song, ADB's director of the energy division for its Central and West Asia Department, told Platts on the sidelines of the 2011 Turkmenistan Oil and Gas Road Show in Singapore.

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According to Song, construction of the pipeline is expected to take three years, so all agreements had to be in place by 2013, in order for the pipeline to meet its startup target of 2016-17.

Song said the bank's role as secretariat for the TAPI project was one of facilitator, to offer advice and guidance to the countries and state oil companies involved, and that its support could eventually include financial backing for the project.

However, it is still too early in the planning stage of the project to say whether that support would be in the form of a loan or an outright investment, or how much it might be, he added.

The project is estimated to cost $7.6 billion.

Leaders from Turkmenistan, Afghanistan, Pakistan and India in December 2010 signed twin agreements, taking the project, which was first conceptualized in the early 1990s, forward.

The two agreements were an intergovernmental agreement, setting out broad governmental responsibilities for the massive project, and a second accord variously described as a gas pipeline framework agreement and as a gas sales and purchase agreement.

All the parties involved have yet to set up a consortium that will operate the massive pipeline project. The ADB has so far failed to find a major company to become project leader.

Meanwhile, no gas sales and purchase agreements between the gas companies of the countries involved have been signed.

Officials with India's state-owned gas utility GAIL told Platts Thursday that TurkmenGas was working towards finalizing gas sales and purchase agreements with GAIL, Pakistan's Interstate Gas, and Afghan Gas within April this year.

Although TAPI was originally envisaged as drawing gas from the Dauletabad field in southern Turkmenistan, recent reports from both Pakistan and India have said that the pipeline will take gas from the giant South Yoloten field.

GAIL officials confirmed to Platts that the gas was expected to come from the South Yoloten field.

"We have looked at the reserves of the field and are reasonably confident that the field can provide this much volume [38 million cu m/d each to Pakistan and India and 14 million cu m/d to Afghanistan] for at least 30 years," Sanjib Datta, general manager for business development at GAIL, said.

According to Turkmenistan officials Thursday in Singapore, the field is estimated to hold at least 21 trillion cu m of gas. The UK's Gaffney, Cline & Associates is expected to release an updated audit on the field's reserves in the next two to three months, Baymurad Hodjamukhamedov, deputy chairman of the cabinet of ministers, said.

Meanwhile, GAIL officials admitted that gas price and pipeline transit fees would be sticky issues that the four countries will have to resolve bilaterally.

--Mriganka Jaipuriyar, mriganka@platts.com
--Thomas Hogue, thomas_hogue@platts.com
--Calvin Lee, calvin_lee@platts.com