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India moves forward on TAPI pipeline for natural gas from Turkmenistan


NEW DELHI -- India' s federal cabinet has approved the formation of a company that will build a multi-billion-dollar trans-Afghanistan pipeline project to bring in natural gas from Turkmenistan.

The decision takes the estimated $7.6 billion project one step closer to being built. Turkmenistan, Afghanistan, Pakistan and India have been holding discussions for more than two decades on building the 1,800-km pipeline--commonly referred to as the TAPI pipeline.

In a statement, the cabinet said it was also allowing GAIL (India) Ltd. to join the company, which will be known as TAPI Ltd. It added that the three other countries in the partnership have already approved the company' s formation.

TAPI Ltd. will undertake feasibility studies and prepare the project report so that the pipeline becomes operational by 2018. GAIL will invest $5 million as its share of the "initial contribution" towards the project and companies from the respective countries will also be required to invest a similar amount, the statement said.

"An active interest in the project by all the partner countries at this stage would sustain the credibility of the project, and generate interest in the international market and could eventually pave the way for selection of an appropriate consortium leader in the future," it said.

The pipeline project faces issues including the Taliban insurgency in Afghanistan and border tensions between India and Pakistan that could delay the project. A separatist rebellion in Pakistan' s southwestern Baluchistan province, through which the pipeline must also pass, further complicates the initiative.

Experts also say that global pipeline companies aren' t keen on investing in the project until Turkmenistan changes its rules to allow them to buy stakes in the country' s onshore oil and gas fields.

Dow Jones Newswires



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