Ajay Kumar Chairman Fox Petroleum

FOX PETROLEUM

Oil & Gas Contracts: Part - II

FOX PETROLEUM Before going to learn about what is Petroleum Contract and how it is constituted into an agreement, we must know – THE LIFE & THE TIMES OF A PETROLEUM PROJECST; Petroleum doesn't last forever. It is a non­renewable resource. This fundamentally drives the business decisions of companies, a key part of which is that most petroleum contracts are structured to contemplate the entire life span of a project, it's beginning, middle, and end. The key stages of a project's life (or "petroleum operations") are:- 1. explore to find it in the first place; 2. develop the infrastructure to get it out; 3. produce (and sell) the petroleum you've found; 4. abandon when it runs out and clean up ("decommission").

Let us know these stages in short – Explore - Petroleum is rarely found on the surface of the earth. One is very unlikely (though would be quite lucky) to step into a puddle of oil, though when this does occur it is known as a "seep" which means what one would think it means: oil below the ground has "crept up" from below the surface to "seep out" onto the surface. In the early years of oil discovery, seeps were probably one of the best means to find oil and gas. And oil still does seep to the surface of the earth in many locations across the globe. But a seep does not mean an oil boom. Nowadays, we use much more scientific and data­intensive means of finding petroleum beneath the surface of the earth.

Stage one planning depends on Seismic data or Seismic survey report; today, geological surveying methods is known as seismic studies (or just "seismic") are usually the starting point of any oil exploration effort. The essences of seismic studies are to use sound waves, shot down into the earth; to 'see' what is underground. Although it is often said that one cannot be certain that petroleum is in a given location until a exploration well is drilled, taking seismic surveys help increase one's confidence that drilling ­ an expensive endeavor ­ in a particular location is worthwhile. In other words, seismic helps climb the 'confidence scale'.

Commonly found beneath the earth's surface are various types of rocks, water and salt, all of which react differently when hit with a sound wave. Large amounts of data are captured from this process and used to give an image of what lies beneath the earth's surface. As computer technology has improved, seismic has been able to handle increasingly large quantities and complexity of data, though the cost of gathering and interpreting this incures increasing costs. This is why you will see in some contracts the type of seismic required (eg. 2D vs 3D), how many kilometers of seismic is to be gathered ("shot" in industry jargon) and specifically that it must be interpreted and the results provided to the host government.

Exploration Drilling i.e. If the seismic produces promising results ­ sometimes called a "lead" ­ then the next phase of exploration will typically be drilling an exploration well. Here, an extraordinarily large drill bit is cut into the earth's surface in order to bring up a "core" or a cylindrical sample of that portion of the earth. Even with conducting seismic to help climb the confidence scale, one might need to drill several exploration wells to establish what is in fact below the earth's surface. One commonly used comparison to exploration drilling (particularly in the deep offshore) is trying to stick an extremely long straw in a drinking bottle from the top of a skyscraper and then drink from it. Of course, there are many areas where hydrocarbons are known to exist, though they might not be evenly distributed. In these cases seismic is still needed to increase the chances of 'hitting the target'.    Because most of us use fuel in our cars which we see as a liquid, many of us envision petroleum to be in lake­like pools below the earth's surface.  In fact, it is found in spaces or cracks within rock formations and needs various techniques to extract (relieve pressure, create pressure, etc).  One might picture a glass with a lot of crushed ice and trying to drink a milkshake from it. While there is no standard amount of time one might conduct seismic studies and drill exploration wells in the world, these studies and drilling and the interpretation of the results even on a very rapid schedule takes months at the very lesat and more often around 2­4 years.

Note : We must know – EXCERPT FROM GHANA PETROLEUM WITH TULLOW, KOSMOS AND SABRE MARCH 10, 20016: “Exploration “ or Exploration Operations” means the search for petroleum by geological, geophysical and other methods and the drilling of exploration Well(s) and includes any activity in connection therewith or in preparation thereof and any relevant process and appraisal work. Including technical and economic feasibility studies, that may be carried out to determine whether a Discovery of Petroleum constitutes a commercial discovery.

          Let us assume that, lucky you, you found hydrocarbons while drilling; you have "discovered" petroleum! Is the pay day coming? Most likely, not quite yet. You may have "discovered" hydrocarbons, but the question then becomes, how much did you find? Enough to make it worthwhile, "commercially viable" or economical to develop and produce? What you will need to do next: "appraise" the discovery.

   Appraising entails more drilling and seismic to asses what you have discovered, but to a greater degree of accuracy. It will lead to more detailed geological discovery while also involving assessment and reflection on how to build the necessary infrastructure to produce the petroleum you've found. You will want to know more about: the chemical composition of the various hydrocarbon deposits:- the chemical composition of the various hydrocarbon deposits and the quantity of reserves in the area also how to get these hydrocarbons out of the ground (if the discovery is found to be of commercial significance). Once hydrocarbons have been found in sufficient quantities and with an economically viable extraction cost, the discovery becomes a "commercial discovery". It is important to stress here that a commercial discovery is not a geologic term but a business term. For this reason, the length of time an appraisal takes will likely depend on such considerations as:- the business considerations of the company that has found the oil & the local laws and regulations that determine the process of development; 

Oil & Gas Contracts: Part - I;

FOX PETROLEUM : OIL CONTRACTS: We put it in our car. It heats wer house. Flies planes. One day we might be beyond it, but today we are not. Petroleum Products – are not for solace its light for life.  The material behind these critical functions that literally fuel the world, is made up of strings of carbon and hydrogen, known as hydrocarbons, formed from the compression of organic matter over hundreds of millions of years. Old stuff that drives the modern age. Oil, gas, petrol, diesel, butane ­ they all come from hydrocarbons beneath the earth's surface that are then are refined to make them more useful to us. But today, I will talk about my experience related the contracts that make finding and producing these substances possible right now.

The first thing that will probably come into our mind when we think about products that could be made out of all that petroleum is probably fuel. However, there are numerous other materials and products that contains oil or gas, e.g. toothpaste, candles, medicines, or even computers. This also explains why currently petroleum is of utmost importance to our lives today.

          Historically, petroleum contracts were designed with crude oil in mind, and this continues to dominate the logic and structure of contracts today. Gas has only recently also become a valuable resource. As the old industry saying went: "What is worse than not finding oil? Finding gas!" This is not true any more, as gas becomes increasingly marketable. But not all contracts around the world have, as yet, caught up to this reality.

  

Natural gas, or just gas, is usually classified within contracts as either non­associated gas and associated gas. Non­associated gas refers to gas reservoirs that contain only gas and no oil, whereas associated gas is found together with crude oil. The implications of these can be far reaching and will affect environmental, social, political, fiscal and technological considerations. Countries with significant gas deposits will typically address these considerations in far greater details in their contracts than countries with primarily crude oil reserves.

Note : In 2011 88 million barrels of oil were produced per day worldwide; one barrel is roughly 160 litres or about 44 US gallons. 317 billion cubic feet (bcf) of natural gas was produced daily. Now it is 48 times more;

Contract depends on drilling on land or in water; Let me explain - Petroleum operations can be either onshore or offshore. Some countries have separate contracts for onshore and offshore, whereas others treat them differently within the contract. In what might be one of the most straightforward terms used in daily talk of oil and gas, onshore operations refer to operations taking place on land, while offshore, or subsea, operations take place in the sea and through the seabed.

   The following diagram shows the three types of petroleum extraction and their comparative costs.

Offshore operations are more expensive than offshore operations because of the type of facilities and structures required. Deep­water drilling is much more expensive than shallow­water drilling because the platforms are technically more difficult to construct. These considerations are addressed in contracts by providing financial incentives (e.g. tax reductions) for those operations and stages of production that are more challenging, riský and costly to the contractor.

Conventional vs Unconventional : Flipping through the newspapers, you read about protesters upset about "unconventional" oil being developed on pristine farm land. Or France is considering banning it. But what is unconventional oil? For that matter, what is conventional oil? The distinction between conventional and unconventional operations refers to the manner, ease and cost associated with extracting the petroleum.

   Conventional oil extraction employs traditional oil wells, and unconventional, the new and emerging technologies and methodologies allowing access to more inaccessible reserves, such as those found in oil shale and oil sands.

   Conventional gas is typically free gas trapped in rock formations and is easier to extract. Unconventional gas reservoirs include tight gas, coal bed methane, gas hydrates, and shale gas (which sits in sand beds). Drilling for unconventional gas can be more expensive compared to conventional gas. The supply of and interest in gas extracted from unconventional reservoirs is growing rapidly, mainly due to technological advances ....but as of the writing of this article, most contracts do not provide for the unique attributes of unconventional gas.

In any contract Price of the Commodity is the main importance of the agreement : Price of the Petroleum :- The price of petroleum is another headline grabber. We all know it is out there, but we probably do not stop to think about the details too terribly often.

    “*What does "Oil is at $100 a barrell mean"? All oil? Some oil? The answer to this is, "some oil".*”

    Petroleum is being bought and sold at many different prices all over the world though they tend to be compared or "benchmarked" off certain common standards. For Oil, West Texas Intermediate (WTI) or Brent crudes or blends and commonly used.

For Gas, Henry Hub is common. These benchmarks, which are the prices that make the headlines, are used to determine the price of oil and gas produced elsewhere. This will be discussed in more detail later in the "Valuing Oil" in the next session of this article.

BUT FOR ME BOTH ARE MAN MADE GAME; FUTURE PRICE OF OIL & GAS THAT’S SURROUNDS UNCERTAINTITY ABOUT THE FUTURE PRICE OF OIL & GAS IS SOMETHING CONTRACTORS AND COUNTRIES KNOWS IN ADVANCE. THEY TRY TO ACCOUNT FOR IT IN BOTH FINANCIAL SYSTEM AND PETROLEUM CONTRACTS SO THAT STAKE HOLDERS MAY PROFIT FROM ANY MARKET CONDITIONS AND ALSO BE PROTECTED WHERE THESE CONDITIONS CHANGE;

Future pricing is like trying to become oil astrologer; But I never failed to make effective forecasting; A critical and heavily debated question is what will the future price of petroleum be? Unfortunately, there is no single or easy answer to this question. What drives oil prices is a subject of much debate about; global oil consumption, economic growth patterns, technological innovation, and political dynamics in oil producing countries. This is not the subject of this article, however, and will be something we'll leave to the experts. Real experts are the daily used of the products;

When OIL & GAS has FUTURE PRICING than WHAT is  FUTURE trends of Contract - The price of oil has, historically, driven fundamental shifts in the oil business and the contracts that underpin it. In late 1960s and 1970s, the famous first wave of nationalisation of natural resources led to the creation of a new form of contract ­The Production Sharing Contract.

   Nowadays, with the price of oil being high, there is an increasing movement of people in resource rich countries wanting visual proof that their natural resources are directly benefiting them. From their position as citizens of the country and therefore as co­owners of the resource, there is a call for re­negotiation of contracts and the formation of new contracts that address this.

LIKE INDIA GOVERNMENT CALLED FOR QATAR GAS RENEGOTIATION AND IT HAS HAPPENED WITH HUGE GAIN TO INDIA SIDE; THE BIGGEST GAME PLAYED BY PRIEM MINISTER TO RENEGOTIATE THE CONTRACT;

   What does all of this mean for oil contracts, the subject of this ATICLE? Who knows, is the short answer. It would seem to suggest that the search for petroleum will continue, at least in the short term, with developing extraction technologies. Maybe this will produce a flurry of new oil contracts between companies and governments that address these new methods of extraction. But they might not.

   The oldest contracts, from the days of Edwin Drake in Pennslyvania back in 1859, did not look terribly different, at the most fundamental level, than many of the contracts today. Is it time to race forward? Keep what we have got? A combination of the two?

  

We do not claim to know and it probably depends on who you're asking, but we do hope that this book enables you to engage in such a discussion and ask questions that could lead you to an answer. The contracts and laws in the petroleum sector are often reformed for various policy reasons and this book is designed to help the reader actively engage in this process. 

TO BE CONTINUED : ----- TO NEXT PART 

Oman India Multi Purpose Pipeline (OIMPP) Route Optimization – The Gas Highway - Risk Assessment Meeting 01

Oman India Multi Purpose Pipeline (OIMPP) Route Optimization – The Gas Highway - Risk Assessment Meeting 01 

1.0 The System concept : As we know, the Geographic Information Systems (GIS) are increasingly used within the oil and gas industry as an important planning tool in all The Gas Highway stages, from exploration to market analysis.  The use of such technology for pipeline route optimization is well acknowledged in the process. However, while the we literally describes many cross-country route optimization The Gas Highways, there are few, if any, that consider the decision criteria for routes traversing the marine environment.  In addition, many GIS based pipeline routing The Gas Highways rely on CAPEX or engineering expertise during the factor selection process.  As some The Gas Highway teams may not have access to cost data or subject matter experts during the early planning stages, a risk based method for selecting decision factors may provide a viable alternative. This The Gas Highway will address these issues, and attempt to assess the validity of a risk based pipeline route identification approach.

1.1  The Gas Highway Objectives: That the Gas Highway has the following objectives:

·         To validate the concept that a risk management process, when applied through a GIS, can yield reasonable pipeline alignments;

·         To create pipeline risk maps for the Arabian Ocean region by identifying and weighting appropriate risks.  Three weighting techniques were applied;

·         To test and evaluate the system against exiting pipelines.

1.2  Why emphasis on Risk?

The last decade has seen growing global and regional demand on the Arabian Ocean  hydrocarbon reserves, and new pipelines will be needed to carry reserves to market.  While construction costs for Arabian Ocean Gas Highway pipelines can easily exceed a billion dollars due to the problems associated with the region’s high risk environments can lengthen The Gas Highway schedules and significantly increase life cycle costs.  Good The Gas Highway Project planning is therefore a must, and an early emphasis on risk management and the application of proven GIS methods can improve routing decisions and the chances of a The Gas Highway’s success.  Additionally, we requires that its safety and risk management guidelines be incorporated into The Project called The Gas Highway conducted on its behalf. 

1.3  Restraints: There were a number of significant constraints on this The Gas Highway Project.  First, subject matter experts were not available for guidance, which forced a heavy reliance on literature sources and further the incompetence of theory and practical reliability.  Second, there were no examples of GIS-based marine pipeline routing like the Project The Gas Highways in the literature, which may result in important marine risk factors being omitted from the potential risk list.  Third, all data had to be acquired from free public sources.  Limited data availability resulted in some danger factors being dropped from consideration, while quality issues involving resolution, accuracy, usefulness and vintage may have negatively influenced results.  A final constraint was managing the expectation that the lowest-risk path would equate to the shortest or lowest cost path.  This may not necessarily be the case.

2.0 Approach :For this Project The Gas Highway, risk management principles and three-dimensional analysis techniques were combined to produce three interpretations of pipeline risk in the Arabian Ocean  region, and to calculate three low-risk pipeline route alternatives. But finally we concluded the path with lowest risk; LESS TURBULENT.

2.1  Risk Factor Identification in the route of The gas Highway :The first step in the analysis was to identify risk factors for the Arabian Ocean  region’s pipelines at the max depth of 3400 to 4000 meters.  These factors were primarily identified through literature review, but some were identified through discussion, unrelated sources and opinion but finally it has been incorporated with marine information and practically zero error management.  This process resulted in 36 identified risk factors, 19 terrestrial, 11 marine and 6 covering both environments.  These factors were then divided into four categories for conceptual and analytical purposes: Construction; Operation; Socio-economic and Environmental.

2.2  Formal Risk Analysis:      The next step was to identify high priority risk factors through a formal risk analysis.  Probability of Occurrence (PO) and Potential Impact (PI) scores, measured on an ordinal scale from 1 to 3 (low, medium or high) were determined for each risk factor based on literature review, experience and educated opinion.  A Risk Score (RS) was then calculated for each risk using the formula (PO/2) + PI = RS, which resulted in a range of scores from 1.5 to 4.5 in 0.5 increments.  This formula was used to keep the maximum score below 5, which was desired for simplicity, and allowed those factors with a PO of 1 but a PI of 3 to make the minimum 3.0 RS value set for high priority risks.   A total of 21 risks were identified as high priority.

2.3  Weighting Methodology of Risk For The Gas Highway

The third step in the analysis was to determine weights of importance for each high priority risk factor.  Three weighting methods were selected, in order to produce multiple pipeline alignments for consideration, and to evaluate the strengths and weakness of each.  The first weighting method is a simple weighted index, while the second and third methods are variations on the pair-based comparison method.

            2.3.1  Simple Weighted Index 

The Simple Weighted Index (SWI) method uses the RS values as factor weights, were higher values indicate higher perceived risk.  Raster data layers were created for each high priority risk using these weights for values.  A final SWI Risk Map was created by adding all layers together, then normalized by dividing by the sum of all layers.

            2.3.2  Pair Based Comparison Overview

                       

Unlike the SWI method, in which each risk is evaluated independently of the others, pair-based methods weight risks by comparing them in pairs.  Factors may be categorized to provide additional weighting levels, or to restrict evaluation between dissimilar factors.  Opinions on weight are often collected through joint inquiries or surveys.  A survey was chosen for this The Gas Highway, as it allows data to be gathered for multiple weighting methods at the same time.  While pair-based methods are designed to allow the weighting of intangible factors such as risk, a major drawback is the high number of pairings that can be produced.  For example, the 21 high priority risks and four categories result in a survey of 216 questions.  To reduce the survey’s length, only those high priority risks with an RS of 3.5 or higher were considered for pair-based comparison, reducing the list from 21 to 19 risks.  Data issues further reduced this list to 18 risks and 159 questions. Two pair-based comparison methods were selected for evaluation in this The Gas Highway, the Brown and Peterson Method (BP), named after the authors who described the method, and the Analytical Hierarchy Process (AHP), developed by M. Saaty. 

            2.3.3  The Brown and Peterson Method

The BP method bases its weight calculation on selection frequency, or the number of times a factor is determined to be the riskiest of the pair.  A matrix table was created to hold the selection frequency data for each survey.  This matrix is read as “is the row factor riskier than the column factor?”  If so, the count of the appropriate cell increases by 1.  If not, the cell count of the opposite choice increases by 1. 

Each individual matrix was combined to make a final selection frequency matrix.  The weights were then calculated by summing the columns, then dividing by the maximum number of times a risk could be selected (the number of survey respondents multiplied by the total number of pairings a risk can participate in). 

Raster data layers were created for each high priority risk using these weights for values.  A final BP Risk Map was created by adding all layers together, then normalized by dividing by the sum of all layers.

            2.3.4  The Analytical Hierarchy Process involved in the Gas Highway

            The AHP calculates weights based on each factor’s degree of importance, which is the magnitude of risk variation between the two compared factors.  Like the BP method, a matrix is used to store respondent’s selections, and is read as “is the row factor riskier than the column factor?”  However, instead of capturing the selection frequency, the degree of importance, measured on a scale of 1 (indifferent) to 7 (significantly riskier), is entered into the appropriate cell.  Also, the opposite choice receives the inverse degree of importance value.

            The AHP allows factors and factor categories to be evaluated.  For this The Gas Highway, categories were evaluated to provide additional weighting to each risk factor, and all factors were evaluated together regardless of their category.   A multi-step process was used to calculate factor and category weights, after which the factor weights were multiplied by their category weights.  The last calculation step divides all weights by the  lowest weight, which makes all weights a measure of how riskier a given factor is than the lowest weighted factor.

Raster data layers were created for each high priority risk using these weights for values.  A final AHP Risk Map was created by adding all layers together, then normalized by dividing by the sum of all layers.

3.0  Results

            The analysis produced three risk maps for the Arabian Ocean  region, one each for the SWI, BP and AHP weighting methods.  These maps were then used to calculate alternative lowest-risk pipeline alignments.

            3.1  Top High Priority Risks

All three weighting methods tended to highly weight 6 of the High Priority Risks.  These risks have distinct spatial patterns, with many of the risks impacting either land or marine environments only.  Seismic risk is a measure of peak horizontal ground acceleration between 1.6 cm/s² and 4.0 cm/s² and above.  Slopes above 5% grade are considered risky, with increasing slope resulting in increasing risk.  This risk was aggregated into three categories, 5-15%, 15-30% and 30%+.  Commercial shipping primarily threatens pipelines through dragging anchors and shipwrecks.  Landslides zones are small, isolated and restricted to the Zagros Mountains.  Crossings indicates locations where a pipeline will cross a linear feature such as a hydrologic feature, a pipeline, a road or a railroad.  Coral reefs are extensive along the southern shores of the Arabian Ocean ; spill windows indicate an area where, if a spill occurs, the pollutant will be pushed onto a coral reef within 2 days.

            3.2  Final Risk Maps

            The SWI Risk Map stands out from the two pair-based risk maps, because it          indicates land is riskier than the Arabian Ocean .  This effect is the result of the SWI methods narrow range of weight values (3.0 – 4.5), which causes the method to behave more as a risk count than a risk measurement; because there are more land risks, land appears riskier than the sea.  The SWI Risk Map suggests moderate risk along the coasts, infrastructure and major commercial shipping lanes, and indicates the front ranges of the Zagros Mountains pose the highest risk due to seismic activity, high slopes, and landslide potential. 

            The BP and AHP Risk Maps have a similar appearance.  Each reduces the distinction between land and sea, indicates no-to-low-risk to the SW of the Arabian Ocean  within Saudi Arabia, Bahrain and western parts of Qatar, suggests moderate risk along coastal regions and within commercial shipping lanes, and indicates the highest risk within parts of the Zagros Mountains due to seismic activity.  The AHP risk map, which relies on degrees of importance rather then selection frequency, exaggerates variation between risks.

            3.3  Validation

            The ultimate goal of this The Gas Highway is to produce alternate low-risk pipeline alignments between designated origin and destination points.  The accuracy, reliability and validity of the risk maps and analysis methods can be tested by comparing calculated paths to existing pipelines.  Two pipelines were selected for comparison, the IGAT 4 pipeline which crosses the Zagros Mountains in Iran, and the Dolphin pipeline which crosses the Arabian Ocean  between Qatar and Dubai.

4.0  Conclusion

            That the project The Gas Highway demonstrates the validity of applying a risk based approach to the problem of pipeline route selection.  In both examples, the SWI alignment produced the shortest of the low-risk paths, while the lowest-risk path was consistently produced by one or both of the pair-based methods.  At least one of the three weighting methods resulted in a close approximation of the actual pipeline route, and one of the methods produced a suitable and economically viable alternative, demonstrating the usefulness of generating multiple solutions. 

There are some issues, however.  Several key risks were dropped from analysis due to a lack of data, while others were digitized from coarse scale images and may therefore be inaccurate.  In addition, much of the data collected for analysis was discrete in nature, resulting in sharp transitions between risk zones and sawtooth patterns in the calculated pipeline routes.  In some cases, the calculated route appeared to come too close to development areas, suggesting a need to reevaluate some minimum safe distance buffers.  Finally, problems associated with surveys, such as survey fatigue and low sample sizes, can reduce the accuracy of calculated weights.

GEOPOLITICAL IMPACT OF RUSSIAN LNG IN ASIA

The world “Geopolitics,” coined in 1904, meant “the study of how factors such as geography and economics influence politics and relations between nations.”  Now it means politics among (not just between) nations and rivalries for international power.  A geopolitically successful nation delivers on promises to allies and threats to rivals — or loses allies and strengthens rivals. And, earlier bat was Crude Oil now an added stick to settle the score is LNG between the Countries;

LNG has made impact relating to politics, especially  international relations, as influenced by geographical factors. As we all know, Crude Oil and Refined Petroleum products has been in control with almost all countries within the Governments control, and further they have added Natural Gas business too into Government Subject. Private Players are merely working like an investor and contributing 3-4% average in developing countries. And in developed countries too, their investment share is not too high and that too depend on Government’s preference. 

That is why, Oil & Gas business is playing major role in Geopolitics – settling rivalry or promise settlement; I mean, the counties are friendly with exporting countries can import Crude Oil and LNG from that Government as well as from private party from that country,   if they have good relation - where the American Stamp is in favor of both, because mostly the payments are in Dollar; If not, the deal is at risk; Dear friends, You know what I am talking, Iran is an example; Russia is an Example for Europe supply.  The changing natural gas landscape—driven by the rise of liquid natural gas (LNG) projects, unconventional boom in North America, protracted global economic slowdown, post-Fukushima recalibration in the nuclear sector, and shifting geography of demand and supply—has renewed debate over the geopolitics of Russia’s energy security. A common refrain is that the increasing interconnectedness and flexibility of global gas markets will introduce a welcome corrective to Russia’s energy policies at home and abroad, encouraging pragmatic commercial dealings and political accommodation with European and Asian partners. Recent steps toward supply diversification and price renegotiation across Europe—especially among heavily import-dependent Lithuania, Bulgaria, and Ukraine— are seen as harbingers of this power shift in Eurasian energy diplomacy.

Russian Gas & its GEOPOLITICAL FACE: A sundry container for LNG market;

A number of Russian oil and gas companies are seeking to grow their gas businesses through LNG exports to Asia. The Sakhalin-2 LNG facility, which is majority-owned by Russia’s largest state-owned gas enterprise Gazprom, already exports LNG to Asia. There are also four LNG export projects in various stages of development that could ultimately export to the region: Sakhalin-2 Expansion, Sakhalin-1’s Far Eastern LNG, Gazprom’s Vladivostok LNG and Novatek’s Yamal LNG. The first exports from these projects are projected to begin between 2017 and 2020. Some of these projects have significant Asian investor involvement, reflecting the keen Asian interest in importing Russian LNG. Notably, the Sakhalin-2 expansion, one of the world’s largest integrated oil and gas projects estimated at over US$25 billion, has Japanese companies Mitsui and Mitsubishi among its shareholders, and 20% of Yamal LNG is owned by China National Petroleum Corporation (CNPC).

Russia is also expanding pipeline gas exports to China. In May 2014, Russia and China finally reached agreement on a deal for Gazprom to supply CNPC with 38 billion cubic meters (bcm) of natural gas per year from East Siberia via the Power of Siberia pipeline. This thirty year agreement underwrites Gazprom’s Eastern Programme and makes a significant contribution to realizing the Russian government’s goal of developing a significant new export market in the Asia-Pacific region. Discussions are now underway on a second deal for Russia to sell China an additional 30 bcm of natural gas per year from West Siberia via the proposed Altai pipeline, which would run from Western Siberia to North-Western China. These deals are of global significance as they will impact China’s appetite for increased LNG imports and may set a benchmark price for gas to China.Under Current Government, Russia’s foreign energy position has embraced the interrelated goals of protecting shares in established gas markets, preempting competition from other sources and suppliers, and leveraging such efforts for commercial and political gain. Relying on a variety of tactics—e.g. discretionary price cuts/hikes, take or pay obligations, state supported subsidies and centralized control over the domestic sector, export tax exemptions, physical supply disruptions, and veiled threats of orchestrating a new gas cartel and arbitrarily switching deliveries between established import dependent European customers and emerging markets in Asia— Moscow has repeatedly flexed Russia’s tremendous natural gas endowments and diffused pipeline network against vulnerable post-Soviet customers and transit states. This has been pursued with seemingly little regard to the pain inflicted upon downstream customers in Europe and Central Asian supply partners. Hence, it is widely believed that geopolitical relief will come with the convergence of sustained weakness in Europe’s demand for gas, growth in global LNG markets, the unconventional gas boom in the United States, and the aggressive pursuit of new markets by other suppliers. Together these factors are expected to transform the global gas landscape in ways largely inimical to Russia’s great power ambitions, compelling Moscow to rethink its coercive strategy.

Let me take this LNG Geopolitics in two parts –    First, Geopolitics of American – Europe and Russian LNG and its impact in Europe, Russia and impacts on United States. And secondly Geopolitics of Arab World – Indian Sub Continent – Africa and Australian taking LNG as object of score settlement not Business;  Let me explain you my views on Geopolitics game from USA- Europe- Russia; The United States has some different definition and Russia has the same logic – but I have a question - can Cheap Oil will bring peace and development? Crude oil prices are at a four-year low and Liquefied Natural Gas (LNG) prices have also fallen since the beginning of 2014. Rising oil production and a slowing of growth in demand are the two main reasons for the drop and main cause is United States 120 Million BBLS Crude Production and Increase in Russian Production Per Day has made Arab Exports to slower down and was the major cause of sinking oil prices. Now, they can resolve this problem by opening up for private players to buy crude with easy procedures to create less gap between production and supply; Not only that, the prospect of large-scale shale gas production in the U.S. is also expected to bring down global energy prices after exports start in 2015.

Gateway House has compiled a list of 58 natural resource-dependent economies. They further shortlisted economies where oil and gas account for over 10% of GDP. Of the 19 countries and they thus identified, 15 are in West Asia, North Africa, Central Asia, and Latin America. Clearly, these regions will be hurt economically by falling energy prices, even as importers such as India, China and Japan gain. Lower energy prices will also impact ongoing geopolitical events—the Arab uprisings, AND us sanctioned states for oil deliveries. Thus European nations are increasingly - and justifiably - worried about the impending winter months when Russia could ratchet up the pressure on Europe, as it has done in the past, by imposing another gas halt with the consequent loss of life and negative economic impacts. Meanwhile the U.S. experiences an explosion of domestic gas production and many in Europe hope that an increase in American Liquid Natural Gas (LNG) exports could anticipate a looming crisis. And, other hand, certainly it is not in the best interest of the U.S. for its allies to be dangerously dependent on monopolistic imports from Russia or anywhere else. However, instead of sending a clear message that LNG export licenses and American energy leadership are coming, the U.S. Senate has put off addressing legislation on LNG exports until September, a risky delay when U.S. LNG could be a life-saving game-changer for Europe ……… Overall, Europe receives up to 30% of its gas from Russia, half of it by pipeline via Ukrainian territory. Even before the conflict in Eastern Ukraine, the pipeline was halted in 2006 and again in 2009 while Gazprom set monopolistic gas prices for much of Central and Eastern Europe. While American LNG may never fully replace Russian gas on the European continent, it can play an important geopolitical and an economic role.

LNG imports could enable states presently dependent on Russian gas to diversify and reduce reliance on long-term contracts with Gazprom, to dampen price gouging and to reduce the influence of potentially hostile states.

US Govt analysis demonstrates that U. S. natural gas reserves exceed all reasonable estimates of U.S. demand for at least 70 years; yet some critics say the U.S. should hoard all gas to "maintain" low domestic energy prices or to ensure a competitive advantage for select U.S. companies. However, as the leading global producer of natural gas, the U.S. could be a leader in creating a free and open global gas market and supporting our allies as they face strong-arm tactics from energy monopolists.

Yet this popular storyline is too crude for benchmarking changes to Russia’s foreign energy posture. To date, energy policy has been neither well integrated into a coherent Russian grand strategy, nor the primary driver of international cooperation or conflict. At home, structural impediments and institutional opacity have fueled divergent interests across the sector concerning investments, greenfield development, pricing, taxes, distribution, access to pipelines, and corporate governance that, in turn, have marred the Kremlin’s capacity to marshal national gas resources from both state and independent companies for discretionary strategic purposes. In retrospect, alarmist characterizations of natural gas as a substitute for the nuclear bulwark to Russia’s superpower status simply have been off the mark.

Similarly, Moscow’s shout has been greater than its echo. Notwithstanding pointed attempts at manipulating the fixed and regionally-defined natural gas infrastructure, success has been both more mixed and less effective than commonly presumed. To the extent that Moscow has realized gains by playing pipeline politics, it has been more successful at wrangling preferential commercial terms for prices and volumes than at altering the politics or foreign policies of highly dependent customers. Physical shutoffs too have been rare and, as evidenced by successive gas wars with Ukraine, have escalated uncontrollably and at great financial and reputational costs to Russian companies and the Kremlin. That Moscow had to follow through on threats to disrupt delivery and has been “co-dependent” on European gas exports to fill federal coffers and offset loss-making across the sector reveal the limited, if not double-edged, coercive potential of the gas weapon. Accordingly, any talk of a geopolitical chastening brought on by a shifting gas landscape must distinguish cheap talk from the nuances, dilemmas, and variation in Russia’s track record of gas diplomacy.

The Market of Russia is down …….. I don’t think so, but the critics say YES; there is no question that Russia as a conventional gas supplier, accustomed to relying on traditional pipelines and long-term contracts, is feeling the pinch of competition across all azimuths. The diversification of supply from the Middle East and West Africa, coupled with opportunities to purchase LNG displaced by the shale boom in the United States (which has overtaken Russia as the biggest producer) and prospects for unconventional production in Eastern Europe, has loosened Russia’s grip over established markets in the EU. Disputes over gas prices and oil indexation spearheaded by France, Germany, and Italy in response to the global supply glut paved the way for renegotiating delivery terms. They also prompted the freezing of European joint development with Gazprom in the Barents Sea, as well as Norway to cut its prices and grab a larger EU market share in 2012. In addition, an adverse judgment in the ongoing EU antitrust probe may foil Moscow’s strategy for restricting competition and dominating the European gas market via ownership of both supply and distribution. China’s persistent harping on price differentials and success at keeping Moscow at bay on a new gas pipeline deal only underscore how Russia is likely to remain captive to its formerly captive gas markets.

Gazprom’s market share also is being tested across post-Soviet Eurasia. Notwithstanding Russia’s determination to advance the commercially suspect Nord and South Stream bypass pipelines, Ukraine is poised to cast off Gazprom’s supply monopoly by attracting investment into domestic shale plays and diversifying procurement of natural gas from European suppliers. In an intriguing twist, Germany’s RWE contracted to deliver small but growing supplies (some of Russian provenance via re-export rights) to Ukraine, using Polish and Hungarian transit services. This reversal of flow in European gas has caught on with the Visegrad Four and emboldened Kiev to renege on extant take-or-pay contracts with Gazprom for a second consecutive year. Lithuania, too, threatens to break out of Russia’s stranglehold and discretionary pricing, with the development of an offshore LNG processing facility capable of eventually providing up to 60 percent of domestic needs. That the vessel slated to provide relief to this “energy island” of the EU is named “Independence” is especially pointed. Furthermore, the recent defeat of the Nabucco pipeline is likely a pyrrhic victory for Gazprom, given the uncertainty that confounds the South Stream project and that the preferred Trans-Adriatic Pipeline portends enhanced opportunities for rival Caspian gas in Russia’s prized European and Balkan markets.

Diversification in foreign markets has been complemented by a deterioration of Gazprom’s privileged position at home. Lower prices in Europe have put a crimp in Gazprom’s revenues just as it confronts significantly higher costs for development of new fields and pipelines. Furthermore, pressure from independent gas companies has prodded the Russian government to double taxes on extraction. Competition stirred by independent gas producers, such as Novatek, and the state-owned oil behemoth, Rosneft, has lowered prices and lured away lucrative industrial clients. The decision to liberalize LNG exports in 2014, coupled with the transfer of assets to Novatek and that company’s own opaque association with Putin, also betrays the Kremlin’s preference for a hedge against Gazprom’s troubled position in the increasingly competitive European market.

…. But Not Out ….. Russia will play LNG game for next 30 years;

Notwithstanding the blows to Gazprom’s monopoly position, Russia is not on the ropes, especially in European gas markets. The main reason stems from the structure of the natural gas industry. What matters for energy security is not simply physical supply but reliable and affordable access. With knife-edged differences among competitors in the global economy, utilities, firms, and states are acutely sensitive to fluctuations in price. The sector’s history of price volatility and need to lock in stable delivery for base-load power generation make it difficult to dislodge Russia and increase investment risks for ensuing future supply diversity amid episodes of cheap gas. Unlike the globally integrated oil sector, natural gas markets will remain regionally segmented for the foreseeable future. This is largely due to thorny above-ground problems related to storage and unlocking the transportation sector for gas, as well as to the high costs of long distance delivery and political resistance to market reforms in most countries. The deregulated U.S. gas market and attendant incentives for private and medium-sized gas-on-gas competition—so critical to spawning the shale revolution—are difficult to replicate, even in Europe where national energy companies and existing contracts remain entrenched. Although the U.S. shale boom has replaced or displaced previous natural gas supply, it has not fundamentally altered the import dependency of large gas customers in Europe or Asia. Should the knock-on effects eventually pose a drastic challenge to Russia’s deliveries to Europe, they also will hurt the interests of key Caspian long-distance suppliers, post-Soviet transit states, and Turkey as an emerging gas hub—potentially driving them closer to Moscow.

This structure of the industry perpetuates Russia’s competitive advantages in established European markets. Soviet legacy investment, production, and large-diameter cross-border pipelines effectively reduce actual costs and ensure Gazprom suitable margins for landing cheap gas to Europe. Although volumes and revenues may take a hit, Russia is nonetheless poised to increase market share in a coming era of spot price competition. It is also true that Russia faces daunting challenges and rising costs to opening up conventional greenfields in East Siberia to manage the decline in West Siberia or to realizing its shale potential. But such difficulties must be measured against the resistance to shale across Europe, startup costs for new LNG facilities worldwide, and prospects for tapping methane hydrates and other unconventionals in Russia and the Arctic. Russia also does not cast a uniform shadow across Europe. As successive gas conflicts made clear, European customers are not equally dependent on Gazprom, with both prices and market shares varying widely among Eastern and Western customers.

Recent studies underscore that these divisions not only cut across EU member states but also hound relationships between host governments and powerful energy firms within Western Europe, with the latter consistently welcoming established profit-maximizing business alliances that draw them closer to Gazprom. Despite Russia’s tarnished reputation as a reliable supplier, these intimate corporate relationships forged out of experience and mutual interests present it with a material and normative foothold in Europe that will be difficult to dislodge, and perhaps even an opportunity for imposing selective price discrimination.

Russian LNG in ASIA : Will be a booster to GDP of Russia;

Geopolitics of Arab World – Indian Sub Continent, However, access to energy sources is not the problem today for India, but India does face a problem, given its heavy dependence on the Russian & Persian Gulf countries and Iran for sourcing its oil and LNG. And, the problem is Sanction. A new theme is finding its way to the Indian discourses on energy security, as is bound to happen, drifting in from the West. Simply put, the United States is ending its dependence on oil imports from the Middle East and the geopolitics of the Middle East could never be the same again. The facts that could go into buttressing the thesis are rather meager and yet a fairly good case can be made out of them. The two achievers for Indian market Saudi Arabia & Russia; Saudi Arabia can play bigger role to become master in LNG supply, and making dependent the Asian sub continent and compensate the two years Crude Oil Loss due to sinking oil prices; LNG opening from Saudi Arabia if, it happens will make THE SAUDI ARABIA number in Arabian region, and will have better relation establisher in Asia and Middle east countries; And, it will boost world Arabian economy and will take UAE the marketing place to due to Banking facility a little easier; This will neutralize the impact of US Gas economics on the GDP of Arab Countries; And in the same manner, Russian Gas flow from Chahbar Port to Oman and then Oman to India will increase GDP of Russia by 3-4% by one product and on India 3-4%; But in that case India will become more powerful with a GDP of 12% almost; That will not be digestible situation for SAARC Countries; Mostly the China & Russia itself; Hence a break-up; The main victims of uncertainty in supply will be emerging economies like China and India who are still to diversify their sources of supply into long-term flexible contracts with other outside the region. 

But again, the West victimizing China and India? The point is, China and India aren’t quite on the same footing as victims. True, India is increasingly figuring as a major consumer of the Middle East’s oil. But China has surged ahead of India in the geopolitics of oil from the region. China is vastly more than a consumer. It is emerging as a tough competitor for the West in regard of the Middle East’s oil resources and the downstream business, because it is also a big investor and is already an increasingly aggressive player in the Middle East market building railroads and metros and massive petrochemical complexes and even presenting itself as an investment destination. Whereas Government of India plans to aggressively Import Oil & LNG from middle east for its deposit for future in the name of energy independence;  It is going to be sound impact in Middle East Oil & Gas Market;

The middle east oil reserves is almost – USD $ 300 Trillion Approx and LNG reserves worth 180 Trillion Dollars Approx and that to the middle east use of LNG and Crude for their own is very less; If India makes the business with – Saudi Arabia, Qatar, UAE and Oman for making a way to import LNG to India by Oman India Pipeline or by Ship; It will make – a- Geopolitical impact in Asia; Because Gas imported in India will serve all Saarc Nations including Pakistan as information thru media sources from Govt of India. The major Geopolitical impact of LNG supply to India will be more realistic ties with Arab World with Republic of India leading to other end Japan.

Geopolitical players in future – Russia -:- 87 billion barrels of proven oil reserves & 1,163 trillion cubic feet of proven natural gas reserves worth $40.7 trillion value at current prices; Turkmenistan -:- 0.6 billion barrels of proven oil reserves; 618.1 trillion cubic feet of proven natural gas reserves; $9.7 trillion value at current prices; Iran -:- 157 billion barrels of proven oil reserves ;  1,187.3 trillion cubic feet of proven natural gas reserves ;  $35.3 trillion value at current prices; Saudi Arabia -:- 265.9 billion barrels of proven oil reserves; 290.8 trillion cubic feet of proven natural gas reserve; $33 trillion value at current prices; Iraq -:- 150 billion barrels of proven oil reserves; 126.7 trillion cubic feet of proven natural gas reserves; $18 trillion value at current prices; Qatar -:- 23.9 billion barrels of proven oil reserves; 885.1 trillion cubic feet of proven natural gas reserves; $16.4 trillion value at current prices; UAE -:- 97.8 billion barrels of proven oil reserves; 215.1 trillion cubic feet of proven natural gas reserves; $13.8 trillion value at current prices; Kuwait -:- 101.5 billion barrels of proven oil reserves; 63 trillion cubic feet of proven natural gas reserves; $11.8 trillion value at current prices; Private Players are ready to bag the contract; Let’s see who is lucky;

Thank You.

Alternative to Turkmenistan Afghanistan Pakistan India Gas Pipeline – THE GAS HIGHWAY (Oman India Pipeline)

MUST NOTE IT WILL PASS THRU

TURKMENISTAN – AFGHANISTAN – PAKISTAN TO INDIA AND 200000 MT OF LNG IF TERRORIST MAKE A USE OF IT WILL CAUSE THE DAMAGE EQUIVALENT TO THE DAMAGE DONE by 100 HIRO-SHIMA-NAGASHAKI BOMB

TAPI is planned by Argentinian company Bridas Corporation and The U.S. company Unocal, in conjunction with the Saudi oil company Delta, promoted alternative project without Bridas' involvement since 1990. On 21 October 1995, these two companies signed a separate agreement with Turkmenistan's president Saparmurat Niyazov. Later on State gas monopoly Turkmengas was selected in August to lead the TAPI pipeline consortium, named after the countries which it is designed to cross.

 "Turkmengas ... plans to start building the TAPI pipeline in early December," the official said on condition of anonymity. "The Turkmen stretch of the pipeline (to the Afghan border) will be built by a (Turkmen) oil and gas pipeline construction firm."

 After 26 years of negotiation  on TAPI, the break through is approached by Pakistani Prime Minister Nawaz Sharif. He will visit Turkmenistan on Friday for the inauguration of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, Pakistan’s Daily Times newspaper reported Wednesday. Parliamentary Secretary for Petroleum and Natural Resources Shahzadi Umarzadi.  Construction of much delayed Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline is finally expected to commence on Dec. 13, Turkmenistan Ambassador to Pakistan Atadjan Movlamov said Tuesday. Addressing a function in Islamabad, Movlamov said ground breaking ceremony of the 1,735-km long.

 But how, it is matter of great interest for me as thru the media I have the information - TAPI project has remained on the drawing board since the four nations have not been able to get an international firm to head a consortium, which will lay and operate the pipeline.  French giant Total SA had initially envisaged interest in leading a consortium of national oil companies of the four nations in the TAPI project. However, it backed off after Turkmenistan refused to accept its condition of a stake in the gas field that will feed the pipeline.

 Since the four state-owned firms, including GAIL of India, neither have the financial muscle nor the experience of cross-country line, an international company that will build and also operate the line in hostile territories of Afghanistan and Pakistan, is needed. Sources said Turkmenistan has so far maintained that its law does not provide for giving foreign firms an equity stake in upstream gas field, without which western energy giants will not be interested to take the risk.

 According to reports coming out after the November 18-20 steering committee meeting of the five major stakeholders — four nations and the Asian Development Bank — in Ashgabat, the first gas to flow from the project could not be expected before mid-2019. When the framework agreements were being signed during the PPP’s tenure, the project was expected to be on line in 2016.

 The consortium leader has to take substantial risks and responsibility for financing and implementing the project. Some Chinese firms have reportedly indicated to Islamabad to be part of the Tapi project, but they were not encouraged. Problems for the project also arose due to Turkmenistan’s refusal to allow multinationals to have a share in the field that will ultimately pump natural gas into the pipeline. Existing laws in Turkmenistan do not allow foreign shareholding in the upstream petroleum sector. So, major companies, including those from the main supporter to the mega scheme — the United States — also seem to be out of the game, at least for now. Even ExxonMobil and Chevron, which were originally pushing for the project, do not see any attraction in it without shareholding in the field. That is also the case with Petronas of Malaysia. The four nations have jointly established the SPV, the TAPI Pipeline Company Limited (TPCL), and registered it in the British Isle of Man to build, own and operate the pipeline from Turkmenistan to India via Afghanistan and Pakistan. International financial institutions and construction firms are also vary of the security situation not only in war-torn Afghanistan but also the terrorism-hit Pakistan.

 Turkmenistan’s Turkmengas, Afghanistan’s Afghan Gas Enterprise, Pakistan’s Interstate Gas Systems Private Ltd and India’s Gail Ltd will have equal shareholding in the company, which would also be responsible for arranging financing, designing, construction and operation and maintenance of the pipeline. Point in question here about Pakistan is the repeated emergence of circular debt and the consequent sovereign default notices issued by independent power producers. In case India moved out, the problem would become even more serious.

 Prime Minister Narendra Modi with Turkmenistan President Gurbanguly Berdymukhammedov as both countries inked seven pacts to ramp up engagement in key areas, including defence including interests in Terming TAPI (Turkmenistan-Afghanistan-Pakistan-India) project as a significant initiative in relationship between the two countries, Mr. Modi said he conveyed to Berdymukhammedov that multiple options including the possibility of land-sea route through Iran for the pipeline should be explored. Seeing the threat of terrorism in Afghanistan and Pakistan.

 HAVING SAID ABOVE – WHY BOARD ON TAPI IF IT HAS SECURITY RISK IN AFGHANISTAN AND PAKISTAN. WHEREAS TURKMENISTAN CONNECT PIPELINE TO CHAHBAHAR PORT OF IRAN AND AFGHANISTAN CONNECTS THE PIPELINE IN THE MIDDLE IS AN ESAY OPTION TO SECURE THE 10 BILLION DOLLARS PUBLIC FUNDS. AND AVOID THREAT TO THE INVESTMENT.

 WHERAS OMAN & IRAN agreed to develop sea route pipeline. And, we are presuming Oman India Pipeline will get a node very soon. Where Government of India has not to invest and with time manner we can finish the project. It is again delayed because of the lack of will power in the Government. Government is in interest to play diplomacy like playing cricket not interested to see the interest of the nation. I am not very literate but this much I know that nothing is important than Country’s economic interest than playing diplomacy in the name of Gas Pipeline.

 COST EFFECTIVE : The pipeline project TAPI needs an investment of 10-12.5 Billion USD whereas Government of India need not to invest a SINGLE PENNY FOR IRAN –OMAN – INDIA PIPELINE and will be dedicated controller of the Oman to India Gas Pipeline. WHY TO PUT TAXPAYERS MONEY AT RISK.

 TRANSIT FEE : There are two problematic issues included with TAPI one is transit fees, and second one is the above-mentioned restrictive Turkmenistan law precluding the private ownership of land and discouraging potential investors to become part of the project, WHEREAS Oman and Iran signed agreement to make undersea pipeline and Oman to India we have made proposal to Oman Government and India Government with 100% funding the link Iran to India via Oman. Where Company will abide a nominal charge to transit gas to India.

 SECURITY CONCERNS : AS I KNOW, 200000 MT OF LNG EQUALS TO 100 HIROSHIMA NAGA SHAKI BOMB; LNG PIPELINES ARE VERY RISKY ITSELF.  The Gas Highway (Oman India Pipeline) will have less security concerns than TAPI. The most pressing set of issues is physical security of the proposed project. These issues arise manly in the transit states – Afghanistan and Pakistan. The tendency observed in media is more or less deliberately avoiding covering news about Afghanistan after the declared assassination of Al-Qaeda’s leader Bin Laden and the start of the gradual withdrawal of NATO and US troops from the country. This might give the impression that the security situation in the country has substantially improved. The reality seems to be somewhat worse than generally depicted. President Obama received in Washington his new Afghan counterpart last March, Ashfar Ghani and amidst abundant praises and compliments, openly acknowledged that “Afghanistan is still a dangerous place”, and local troops are still unable to maintain law and order in the country without foreign military assistance. On the same occasion, several former senior officials in an open letter described the environment in the Central Asian republic as a “stalemate” and remarked that the political and economic situation is fragile. UN Secretary General, Mr. Ban Ki Moon quoted in the work of Natasha Underhill warned that at present conditions the risk for the situation in the country to become irreversible still exists, especially as a result of weak government legitimacy and controversial elections. After a year it is probably still too early to assess President Ghani’s ruling performance. Stratfor’s analysis of September 2014 also envisioned a mounting risk after the complete withdrawal of US troops, promised by President Obama within the terms of its office. Stressing the fact that “political forces are still far from reaching a durable power-sharing arrangement”, it explains that, in brief, a divided pro-Western front is likely and particularly vulnerable to the Afghan Taliban.

 The latter extremist group, moreover, announced that this year’s “spring operations” would begin on April 24, targeting what they called “the stooge regime” of Kabul, together with the “foreign occupiers”, that is, US troops. It does not come as a surprise therefore, that rumours about an imminent start of trilateral peace talks between the US, Afghanistan and Afghan Taliban in Doha, incidentally promptly denied by official sources, proved wrong and such a meeting, to this day, has not taken place and it is not likely to take place in the foreseeable future.

 Overall, more than a quick and mediated resolution, the premises seem to suggest that tensions and clashes will persist in the medium to long term. In 2012, Pakistani press claimed that “the Afghan Taliban have assured that they would not sabotage the project,” and used this as a main argument to assert that the problem of transit was probably going to be solved soon. The main issue is whether it is wise to look at the Taliban as a rational actor. To this end, the reader should bear in mind the extremist religious values at the base of the movement, for which the latter has been perpetrating continuous acts of violence in the country and several major terrorist attacks abroad. It can be easily deduced that religious values for the group are more important than political and economic profitability. A situation where the government, which had previously agreed upon the non-sabotage, changes its political orientation as a result of elections or different external stimuli to a tough pro-Western and anti-Taliban stance, is not a remote possibility. Will the Taliban respect the agreement simply because pacta sunt servanda?  Even regarding the Taliban as a rational actor, as the US strategy shifts toward to more pressing priorities (Ukraine, ISIS), they retain their motives to conduct war against Kabul and try to profit from the imminent departure of well-trained foreign troops.

 There is an idea of deploying troops to defend the construction operations and the functioning of the pipeline that would run through very dangerous regions (such as Kandahar and Herat). Military presence will increase costs and cause more insecurity, being likely to motivate terrorist attacks. Infrastructure is seen as a source of legitimacy for the central government and thus is a natural target for the terrorist attacks already.

 Last but not least, there is lack of evidence that the area selected for the project has been cleared of land mines. There are also security problems on the territory of Pakistan. The pipeline is planned through secessionist province of Baluchistan, which presents a heavy security threat. Quite obviously, the Baloch independentism organisations have stressed that any project involving transit in the area has to be agreed upon with a “legitimate” representative, in this case, the London-based leader Hyrbyair Marri. The risk of sabotage, therefore could be very high. Moreover, the Baloch independence group would gain significant leverage over Islamabad’s government from TAPI. Meanwhile, India would suffer heavily any provoked disruption.

 Overall, the risks afflicting the physical functioning of the project are very high, if not to say unprecedented in international experience and, additionally, no significant improvement is foreseeable.

 GEOPOLITICAL CONTEXT : THE GAS HIGHWAY (OMAN INDIA PIPELINE) VERSES TAPI : THE SAFETY OF THE GAS THRU THE GAS HIGHWAY IS HIGH NATURALLY DUE TO THE PIPE LAYED AT VERY DEEP PARAMETERS OF SEABED WHERE LAND MINES CAN NOT WORK WITH REMOTES. BUT TAPI HAS MASSIVE  Security concerns – ultimately safety of transit through Afghanistan and Pakistan – would discourage most of foreign companies from entering the project. So why are the parties willing and determined to take the risk of long-term unreliable supply? The answer can be found in the fact that a long-term project, especially when it deals with the shared use of a key resource like gas, as in case of TAPI, means that a long-term geopolitical game is at stake. Central Asia has a strategic location and all actors – especially Turkmenistan, Pakistan and India – have strong geopolitical interest in connection with the implementation of the pipeline. In particular, the two traditional geopolitical enemies in the area, Pakistan and India, see the pipeline as a way of building a relation of interdependence with Afghanistan while sharing the risk of such an attempt. Both India and Pakistan are looking at opportunities to enhance their status in the region. Both countries regard Afghanistan as a strategic ‘asset’, mainly because of its geographical position.

 The US has been strongly backing the project since the very break-up of the Soviet Union in 1991. At the same time, there are hopes that the pipeline will help to promote better relations with the countries involved in it. The ultimate aim is consolidating a pro-US “curtain” in the area, while simultaneously breaking China’s monopsony in Turkmenistan’s upstream and the preferential relationship between the two. The TAPI pipeline in virtue of its long-term nature can serve as a basis to build interdependent relationships with other actors. According to Nye and Keohane’s interdependence theory presented in their book “Power and Interdependence” a long lasting interdependence relationship can easily become asymmetric under the pressure of internal or external factors. Asymmetries in this case should be regarded as a source of power vis-à-vis the more dependent part.

 Asymmetries that may emerge in a context of traditionally very tense international relations can be used as weapons. Natural gas, particularly if used in power generation, is very suitable for damaging purposes and/or retaliation. Therefore, the risk of a conflict escalation out of a dispute should be taken into account, especially in the light of the nuclear status of India and Pakistan.

 At the macro level, the pipeline also could contribute in deteriorating China-US relations, due to a probable reinforcing “encirclement complex” of the former. This is even more likely to occur in the wake of the clear interest for Central Asian resources demonstrated by China. China, in brief, will try to counter the open support by the US and their aim to favour Turkmenistan’s differentiation away from its now de facto unique customer.

 Overall, the project is entangled with a thick network of multi-level geopolitical interests. India and Pakistan tend to overestimate the potential benefit of gas trading for their regional aims over the risk of becoming vulnerable to an unreliable partner. There is also a potential of China-US contradictions of influence in the region.

 CONCLUSION : THERE ARE MANY DRAWBACKS OF THE TAPI AND GOVERNMENT IS ADAMANT TO TAKE RISK ON TAPI BUT NOT INTERESTED IN OMAN INDIA PIPELINE CONNECTING IRAN OMAN PIELINE JUST FOR THE SACK OF MAKING PRESENCE IN CENTRAL ASIA MAKING TAPI AS TOOL TO PLAY GEOPOLITICS. BUT I SUPPOSE GOVERNMENT WILL RETHING TWICE ABOUT TAPI BEFORE GOING FOR IT, AS NO GOVERNMENT HAS WON YET ON TALIBAN AND PAKISTAN BASED TERRORIST GROUP. CAN ANY GOVERNMENT EVEN PAKISTAN GOVERNMENT SAY THAT THIS PIPELINE WILL BE SECURED AND WILL NEVER HAVE ANY SET BACK FROM TERRORIST. THE ANSWER IS “NO”. HENCE TAPI IS A HORROR PROJECT PUTTING TAX PAYERS MONEY IN RISK DESPITE KNOWING THE THREAT.