Tag Archives: pipelines

ADB says that Turkmenistan’s TAPI pipeline is ‘doable’

APRIL 8 2016 (The Conway Bulletin) – The Asian Development Bank (ADB) said it will support infrastructure projects in Turkmenistan, including the $10b TAPI gas pipeline and also rail and electricity links to neighbouring countries.

Over the next two years, the ADB plans to invest around $1b on construction of railway corridors and the production and supply of electricity.

On TAPI, the pipeline that should, if all goes to plan, pump Turkmen gas to India through Afghanistan and Pakistan by 2019, the ADB delivered a determined, positive endorsement.

“We’re going through some of the toughest territory in Afghanistan, so the challenge is there. There’s no doubt about it,” Sean O’Sullivan, director for Central Asia at the ADB, told Reuters the day after a $200m investment deal was signed for TAPI between its key shareholders — Turkmenistan, Afghanistan, Pakistan and India.

“But I am sure it’s doable.”

The ADB has been a staunch defender of the TAPI pipeline, which many analysts have said is too complicated to pull off successfully, and advised the partners on the financing of the $10b project.

Previously, the ADB pulled funding from the Turkmenistan-Afghanistan-Tajikistan railway link, because of security concerns. Now, by saying that TAPI is “doable”, Mr O’Sullivan is effectively giving the ADB’s endorsement to the project, despite ongoing doubts on security guarantees.

In the meantime, construction work continued on TAPI, with Turkmen officials triumphantly announced that they had finished welding the first kilometre of the pipeline.

The other countries have reportedly started construction work too.

ENDS

(News report from Issue No. 276, published on April 15 2016)

Georgia charges transit fee

APRIL 8 2016 (The Conway Bulletin) – After months of negotiations, Georgia and Russia’s Gazprom retained a deal that will give Georgia 10% of Gazprom’s gas throughput to Armenia. The deal was heralded by the Georgian side as a victory. They said that Gazprom had wanted Georgia to charge it a transit fee for hosting a pipeline to Armenia and then pay for its own gas.

ENDS

(News report from Issue No. 276, published on April 15 2016)

Azerbaijan- Armenia fighting over N-K threatens Europe’s plans

APRIL 2 2016 (The Conway Bulletin) – For Europe, the fierce fighting this week between Azerbaijani forces and Armenian-backed forces was a reminder that their plan to bring the South Caucasus firmly into its economic sphere is a risky one.

Eight years ago Russia and Georgia fought over the rebel region of South Ossetia. Now Azerbaijan and Armenia are close to all-out war over another sliver of land.

Wedged between these two scruffy, mountainous regions is the trade corridor that Europe relies on to transport goods to and from the Caspian Sea and Asia.

Theodoras Tsakiris, assistant professor for energy, geopolitics, and economics at the University of Nicosia in Cyprus told RFE/RL that two major pipelines pumping oil gas to Europe which lie just north of the conflict zone could be effected.

“A potential conflagration over Nagorno Karabakh is quite likely to affect both of these pipelines,” he said. “They are of critical significance primarily for Azerbaijan, then Turkey and, to a lesser extent, Europe and the global economy.”

European officials have avoided mentioning trade and gas exports from the South Caucasus in their comments on the fighting and have instead focused on calling for a full ceasefire but bureaucrats across Europe’s capitals will be troubled by the conflict.

Central to their plan is to build a network of pipelines stretching from the Caspian Sea across Azerbaijan, Georgia and Turkey into Europe. Gas from this route, dubbed the Southern Gas Corridor, would start to compete with Russian supplies.

Sections of the pipeline, after all, run only 40km north of the frontlines in Nagorno-Karabakh.

ENDS

(News report from Issue No. 275, published on April 8 2016)

KazTransOil revenues grow in Kazakhstan

APRIL 1 2016 (The Conway Bulletin) – KazTransOil, Kazakhstan’s state owned pipeline distributor, said its revenue grew 3.2% to 213b tenge ($617m) in 2015. In US dollar terms, however, the company’s revenues shrank by around 30% due to the sharp depreciation of the tenge last summer. Analysts forecast a decline in sales for KazTransOil in 2016, but the company hopes to boost its revenues in 2017 with the giant Kashagan project coming online.

ENDS

(News report from Issue No. 275, published on April 8 2016)

Four members, including Turkmenistan agree on TAPI investment

APRIL 7 2016 (The Conway Bulletin) – State-owned Turkmengaz, Interstate Gas Systems of Pakistan, Afghan Gas Enterprise and India’s GAIL agreed to invest $200m in engineering studies for the TAPI gas pipeline project. The four members of the consortium forecast that TAPI will cost around $10b. Construction works started last December. Once built, TAPI will pump gas from Turkmenistan’s Galkynysh gas field to India.

ENDS

(News report from Issue No. 275, published on April 8 2016)

BPC Engineering and Kazakh gov. make turbine deal

MARCH 29 2016 (The Conway Bulletin) – BPC Engineering, the Russian distributor of California-based Capstone Turbine, said it reached an agreement with the Kazakh government to supply seven micro-turbines for the Beineu-Shymkent gas pipeline. Around 50 micro-turbines are needed in the pipeline, part of a $3.5b project to pump gas from west to south Kazakhstan.

ENDS

(News report from Issue No. 274, published on April 1 2016)

Business comment: SOCAR & The EU

APRIL 1 2016 (The Conway Bulletin) – SOCAR said it hopes to solve the DESFA affair by the end of the year, but should Fluxys’ shareholders officially decide to back out of an earlier plan to buy part of the Greek company, Azerbaijan’s state-owned company will find it hard to comply with EU regulations.

The so-called Third Energy Package is a set of regulations the EU adopted in 2009 with the objective of liberalising its energy market, chiefly by separating the ownership of upstream, midstream and downstream operations, a process known as “unbundling” in Brussels.

According to these rules, SOCAR cannot buy, as it wished, a majority stake in DESFA, the Greek gas distributor.

That would effectively mean that the gas supplier would own the distributor as well.

SOCAR also owns a majority stake in TANAP, a pipeline running across Turkey. SOCAR is allowed to keep its 58% share in TANAP because it lies outside EU jurisdiction.

But when in 2013 it agreed a deal to buy 66% of the debt-ridden Greek company for €400m ($454m), the European Commission stepped in and froze the purchase. It said that SOCAR could own 49% of DESF but no more.

For a year now, SOCAR has tried to find buyers for part of the 66% stake it agreed to buy. If Fluxys flakes, Italian Snam Rete Gas and Dutch Gasunie could be next in line.

Even though SOCAR has become a good friend of the EU for its key role in the completion of the Southern Gas Corridor project, seen by Europe as a viable alternative to gas from Russia, it apparently cannot escape the severe hand of the EU’s army of regulators.

ENDS

(News report from Issue No. 274, published on April 1 2016)

Azerbaijani SOCAR’s deal to buy Greek gas distributor put into doubt

MARCH 28 2016 (The Conway Bulletin) – Belgian gas distributor Fluxys has pulled back from buying a 17% stake in Greece’s gas pipeline operator DESFA, media reported, potentially derailing a deal by Azerbaijani energy company SOCAR to buy 49% of the Greek company.

Azerbaijan’s SOCAR had initially agreed to buy a 66% stake in the Greek distributor in 2013 for €400m ($454m) but the European Commission stepped in and said that a 2009 regulation meant it could only buy a 49% stake. This effectively froze the deal until SOCAR found a company to agree to buy the 17% stake.

The pressure is now on SOCAR, which has until the end of 2016 to comply with EU regulations and find another purchaser.

In the current low-priced market, though, this will not be easy and SOCAR admitted as much.

“Currently we are in the process of reducing the stake of DESFA through sales to potential buyers in Europe and this process is expected to be completed in late 2016,” the Natural Gas Europe website quoted an unnamed source at SOCAR as saying.

For SOCAR, buying a stake in DESFA is important. It is due to play an important technical back-up role in Greece for the final section of a pipeline pumping gas to Europe from Azerbaijan.

The Greek newspaper Ekathi- merini quoted unnamed sources as saying that the deal with Fluxys was off. When reached by phone, though, Fluxys declined to confirm one way or the other.

A Fluxys spokesman said: “Since the beginning, we have not been involved directly as a company. It is a matter that Fluxys shareholders need to address.”

Neither Belgium’s Publigas, which owns 77.7% in Fluxys, nor Canada’s Caisse de depot et placement du Quebec, which owns 20% in Fluxys, could be reached for a comment.

Fluxys had looked like a good fit to buy DESFA because it owns a 19% stake in the Trans-Adriatic Pipeline (TAP), the planned final section of a network of pipelines stretching from the Caspian Sea to Europe.

ENDS

(News report from Issue No. 274, published on April 1 2016)

Uzbekistan to modernise pipelines

MARCH 18 2016 (The Conway Bulletin) – Uzbekistan’s state-owned gas firm Uztransgaz will invest $506m modernising its pipeline system. Uztransgaz will spend around $266m building a new section of the 10b cubic metres pipeline from the Ferghana valley to Tashkent which was damaged last year after an explosion. Uztransgaz also said it will modernise one of its compressor stations at the Central Asia-Centre export pipeline and build a new one for a total cost of $215m.

ENDS

(News report from Issue No. 273, published on March 25 2016)

India snubs Turkmen TAPI pricing

MARCH 21 2016 (The Conway Bulletin) – India’s oil ministry said in a statement that it will not sign a contract with Turkmenistan that fixes gas prices for supplies coming through the prospective TAPI pipeline. The Indian government said it will not repeat the unprofitable relationship it had with Qatar, which exported liquefied natural gas at a fixed prices. This became costly when oil prices collapsed in 2014 driving down spot prices for gas.

ENDS

(News report from Issue No. 273, published on March 25 2016)