Clifford Chance (CC) has advised the Asian Development Bank (ADB) on a number of agreements in relation to the Turkmenistan, Afghanistan, Pakistan to India (TAPI) pipeline project. The project offers major economic benefits to all three countries, but depends on building and defending a U.S.-backed pipeline across chronically unstable Afghanistan.
The ADB is facilitating the 1,678-km pipeline, which includes a 735-km leg through the Afghan provinces of Herat and Kandahar. Last week, Turkmenistan's state gas company Turkmengaz, signed gas sales and purchase agreements with Pakistan's Inter State Gas Systems and Indian state-run utility GAIL. These, along with gas sales memorandum of understandings between Turkmenistan and Afghanistan, are expected to pave the way for the development of the pipeline from Turkmenistan to India.
India and Pakistan are both hungry for gas supplies and Turkmenistan, formerly part of the Soviet Union, is keen to free itself from reliance on gas exports to Russia. The idea of the TAPI pipeline was first raised in the mid 1990s, but construction has yet to begin.
Turkmen officials have said the proposed pipeline could carry one trillion cubic metres of gas over a 30-year period, or 33 billion cubic metres a year. A U.S. official estimated in March that the pipeline could cost between $10 billion and $12 billion to construct.
Turkmenistan is also promoting the TAPI pipeline as a key element in its plans to boost annual gas exports to 180 billion cubic metres by 2030. BP data shows that Turkmenistan's natural gas reserves are equal to those of Saudi Arabia and behind only Russia, Iran and Qatar.
The Clifford Chance team, led by Singapore-based partner Merrick White, helped prepare and negotiate the gas sales, pipeline framework and inter-governmental agreements for the project. Under the gas sales agreements, India and Pakistan would each get about 490 billion cubic feet of natural gas from the pipeline every year, while Afghanistan will get about 180 billion cubic feet per year.
"This is one of the largest gas sales in the world to date,” said White in a statement. “It opens up a major new export route for Turkmenistan which has enormous gas reserves. It provides a tremendous source of energy for such energy-starved countries as Afghanistan, Pakistan and India, and at the same time is a significant long term source of revenue for Turkmenistan.”
White was assisted by Beijing counsel Brian Cassidy. ALB / Reuters
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