(Online Course) Contemporary Issues for IAS Mains 2012: PIB - GSPA [Triumph of Multilateralism, Regional Cooperation & Economic Integration]

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GSPA - Triumph of Multilateralism, Regional Cooperation & Economic Integration

The signing of Gas Sale and Purchase Agreement, GSPA with Turkmenistan on the 23 May, 2012 marks a major step towards India’s energy security. It will turn the dream of bringing natural gas from the Galkynysh field, better known by its previous name, South lolotan field in Turkmenistan into a reality. The gas will come via Herat and Kandahar in Afghanistan and Multan and Quetta in Pakistan to Fazilka in India through the 1700 km long Turkmenistan– Afghanistan–Pakistan–India, TAPI pipeline when it is complete by 2018. The pipeline will carry 90 million metric standard cubit metres, mmscm of gas per day. Of this, Afghanistan will get 14 mmscm and Pakistan and India each 38 mmscm of gas. Daniel Stein, Energy Advisor at the US Department of State said in a presentation in March this year that the pipeline alone will cost about 10 to 12 billion dollars. Besides, the development of the gas field will cost another 10 billion dollars.

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The deal was signed between the Indian public sector company, Gas Authority of India and Turkmenistan’s national oil company, Turkmengaz. India’s Petroleum Minister, Mr. Jaipal Reddy was there at Awaza in Turkmenistan to witness the signing of the agreement. Later, addressing the 3rd Turkmenistan Gas Congress there, he said, “For India the signing of the GSPA is no ordinary event. While the GSPA could be construed by some as a mere contractual document, for India this particular GSPA is a triumph of multilateralism, regional cooperation and economic integration”. Mr. Reddy congratulated the petroleum ministers of Turkmenistan, Afghanistan and Pakistan for their vision for making a project of this magnitude happen and expressed hope that the TAPI Gas Pipeline will transform the politics of this region and increase its economic integration. He said,
hopefully, the spin-off benefits of this pipeline will encourage these four countries to emphasise trade and investment issues and enable themto build trust and confidence among themselves as neighbours and partners in progress.

India joined the TAPI project on 24th April 2008 when Pakistan, India and Afghanistan signed a framework agreement to buy natural gas from Turkmenistan. This was followed by the signing of the intergovernmental agreement on the pipeline which was signed on 11th December 2010 in the Turkmenistan capital, Ashgabat. Then protracted negotiations on transit fee with Afghanistan by both India and Pakistan continued till the 16th May this year when the upper House of the Afghan Parliament, Meshrano Jirga cleared the transit fee proposal. The Jirga fixed the transit fee for allowing the gas to flow over the Afghan territory at 50 cents per million British thermal units, mmBtu. The next day the Indian Government gave its go ahead to the Gas Authority of India, GAIL to sign the deal with its Afghan and Pakistani counterparts. It was decided that the transportation charges for the gas will be fixed after a consortium is formed to look after the maintenance of the pipeline. Besides negotiations on transit fee, discussions on the construction of the pipeline which involves great security challenges also took a long time. All the four countries involved in the TAPI project will stand to hugely benefit once the pipeline is complete. The pipeline will help India and Pakistan diversify their gas supply. India will benefit as the delivered price of gas on the Indian border works out to $10-12 per mm Btu as compared to $16 permmBtu rate of gas imported in ships in its liquid form, LNG. Turkmenistan will benefit as it wants to triple annual gas exports to 180 billion cubic metres by 2030, looking beyond its traditional partner Russia to wider export markets. Afghanistan apart from getting 14 mmscm gas per day, will get 18 million dollars per year as transit fee. In return it will provide security to 735 km stretch of the pipeline running over its land.

Though the GSPA was signed among the four countries yesterday, the idea of bringing gas out of Turkmenistan is very old. The GSPA has been signed for 30 years and South lolotan field is the second largest in the world, but India’s search for energy sources has not ended. India which aims to become the world’s second largest economy by 2050, must keep its growth engine running. Besides tapping domestic thermal, hydro and nuclear energy sources, the country will continue to import oil and gas from other countries to achieve its 12th Five Year Plan target of 76,000 mega watt of power generation. (PIB Features.)

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