ISLAMABAD After rejection from Turkmenistan to link cost of production in setting the gas-pricing formula under Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project, member countries are apparently forced to link the gas price with some percentage of the world crude oil, sources said on Monday.
It was learnt that four member countries setting aside the previous proposal to link Turkmenistan's cost of production in setting the gas pricing formula under US-backed Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project are likely to finalise pricing details and sign the gas sales purchase agreement through a new proposal till October 15. The member countries are now forced to link the price with some percentage of the world crude oil, sources said.
"Turkmenistan, Afghanistan, Pakistan and India are likely to finalise a gas pricing formula for TAPI till October 15 as Turkmenistan has so far rejected the gas pricing formula proposed by its prospective buyers under TAPI," sources said, adding, that technical teams of the four countries in a recent meeting of the Technical Working Group held in the Turkmen capital of Ashgabat, had set October 15 as the deadline to finalise pricing details and sign the gas sales purchase agreement.
Earlier July 31 was set as the deadline but extended when four countries could not agree on a formula. Reportedly, the buyer countries might make some concessions to Turkmenistan, including perhaps linking it to the global price of crude oil. The price of Iran's gas exports to Pakistan is 78 percent based on the global price of oil.
It is testimony of the fact that in a two days meeting held on May 17 and 18 earlier this year, Kabul and New Delhi had accepted Islamabad's suggestion that the three buyers collectively propose a gas-pricing formula based on Turkmenistan's cost of production, rather than being linked to the price of oil, which is the standard global practice. However, Pakistan's formula can restrict Turkmenistan to a fix profit margin.
In spite of this, Pakistan has signed an agreement with Iran that would link the gas import price to the international price of oil. Moreover, in its untiring effort to economically isolate Tehran, Washington has been pushing Islamabad to accept the TAPI pipeline project as an alternative to the Iran pipeline, apparently going so far as to threaten sanctions if Pakistan does not comply with.
Official sources in Ministry of Petroleum privy to the development requesting anonymity while talking to TheNation shared hopefulness to meet the deadline for an accord though no agreement appears to have yet been reached in this regard.
"The technical teams of all member countries (TAPI) have to reach on final price of gas to be import from Turkmenistan under TAPI gas pipeline project very soon," official sources said, adding, "We are confident that GSPA would be signed by October 15 to move ahead on gas import project."