On August 10, Chairman of Turkmenistan’s Halk Maslahaty (Parliament) Gurbanguly Berdimuhamedov paid a working visit to Afghanistan, where he held talks with Deputy Chairman of the country's government for economic affairs Abdul Ghani Baradar. One of the central issues discussed was the implementation of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, including its key Afghan section, Serhetabat-Herat. During the visit, the sides discussed further progress on the project, transport and energy infrastructure, and the need for closer coordination between relevant agencies.
The results of construction work on the Serhetabat-Herat section were presented on site. In addition, state concern Turkmengas and Afghan Gas company signed a memorandum of understanding on supplies of Turkmen gas to Herat province. The importance of TAPI is currently driven primarily by the need for additional and more diversified natural gas supplies in South Asia.
The project is designed to deliver up to 33 billion cubic meters of gas annually from Turkmenistan to Afghanistan, Pakistan and India, with the Galkynysh field serving as its resource base. For India, the project is particularly important amid long-term growth in gas demand and the need to expand its import base. In its January analytical article "Turkmen gas for Asia: the role of TAPI," Trend had already examined these processes, noting that rising gas consumption in India, combined with growing geopolitical uncertainty around maritime energy supplies, could increase the country's interest in TAPI.
The current situation can therefore be viewed as a continuation of that trend, which has gained additional momentum amid growing vulnerabilities in global energy markets. Against this backdrop, an overland route from Central Asia to South Asia gains additional value for consumer countries because its operation does not depend on tanker shipments passing through the Strait of Hormuz. At this stage, TAPI faces another issue - a commercial one.
On August 10, as part of Gurbanguly Berdimuhamedov's visit to Afghanistan, state company Afghan Gas and Turkmengas signed a memorandum on gas purchases, but the sides still need to determine the price, demand volumes and the mechanism for allocating supplies. On the same day, Abdul Ghani Baradar called for a long-term agreement on the gas price and urged the sides to adjust the pricing formula so that sharp swings in European gas markets would have less impact on the cost of supplies. He also proposed including a flexible mechanism for revising the contract.
To understand the logic behind this request, it is important to look at how gas prices are formed in Europe today. The key benchmark is the Dutch Title Transfer Facility (TTF), Europe's main gas trading hub and the continent's principal gas price reference. Prices there are shaped by wholesale supply and demand, with trading covering day-ahead deliveries as well as monthly, quarterly and longer-term contracts.
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