August 30, 2008

India and Pakistan agree to buy gas from Turkmenistan

PTI reported that India and Pakistan have committed themselves to buying natural gas from Turkmenistan despite cost of laying pipeline from Turkmenistan doubling to USD 6 billion. India, Pakistan and Afghanistan signed the framework agreement with Turkmenistan for laying the line by 2015.

Two days of deliberation of the steering committee of the Turkmenistan Afghanistan Pakistan India pipeline, that has the US backing, saw the formal induction of New Delhi and resolved issues regarding gas reserves in Turkmenistan and demand of the South Asian neighbors.

After the meeting, Mr Khwaja Asif Pakistan's petroleum minister said that "We are strongly committed to the project. We believe it is still economically viable for the four countries even after the escalation in cost."

According to a draft feasibility study prepared with the support of the Asian Development Bank, which is financially backing the pipeline, the estimated cost of the project has increased from USD 3.3 billion in 2004 to USD 7.6 billion. The escalation was due to sharp rise in steel prices, jump in construction costs and cost of compressor stations to be set up for the 1,680 kilometer line from Turkmenistan's Daulatabad gas field to Fazilka on the India Pakistan border after passing through Herat and Kandahar in Afghanistan and Multan in Pakistan.