India on May 23 signed an agreement to buy gas via the much vaunted TAP or TAPI (Trans-Afghanistan) gas pipeline.

Seen by many as the modern continuation of the Silk Road, the pipeline will reportedly earn the Afghan government at least 8% of the total revenue of the project (close to $350-400 million) in transit fees.

Envisioned in the 1990s as an alternative to Russian pipelines, the TAPI project was supposed to circumvent Iran as well to provide Turkmenistan and Kazakh gas companies an alternative route to supply gas to south Asian and western markets.

In 1995, a memorandum of understanding was signed between Turkmenistan and Pakistan which would lay the foundations of the pipeline. The initial consultations were held with an Argentine company, Bridas Corporation. Americans evinced interest in the project and formed a consortium named CentGas headed by Unocal to carry out work on the pipeline. The Taliban government of Afghanistan in 1998 chose the American offer over the bid made by the Argentine company.

The fall of the Taliban in the same year in Afghanistan resulted in Unocal withdrawing its bid as it was closing its offices in Afghanistan and Pakistan. The Russian company Gazprom too relinquished its 10% stake in the project.

The new deal on the pipeline was signed in 2002 by the leaders of Turkmenistan, Afghanistan and Pakistan. In 2005, the Asian Development Bank, which was encouraging the project, submitted the final version of a feasibility study which was conducted by British company Penspen.

The project has since received American backing as it would enable Central Asian countries to export gas to western markets without relying on Russian pipelines.

India entered the scene a little later. India, Pakistan and Turkmenistan signed an agreement to buy gas in 2008. However, India and Afghanistan failed to agree on the transit fee for the gas with the Afghans demanding a larger share. India faced the same problem with Pakistan too.

Finally, in 2012, the upper house of the parliament of Afghanistan, the Meshrano Jirga, gave permission to the government to go ahead with the pipeline project.

TAPI will be constructed alongside the highway running from Herat to Kandahar in Afghanistan, and then via Quetta and Multan in Pakistan. The final destination of the pipeline will be the Indian town of Fazilka, near the Pakistan border.

For various security reasons, the ADB had proposed several alternative routes in Afghanistan and Pakistan. One alternative was through Taskepri in Turkmenistan to Shebarghan and then through Balakh, Mazar-i-Sharif, Samangan, Kabul and Jalalabad in Afghanistan, and Peshawar, Nowshera, Islamabad and Lahore in Pakistan to India. Another alternative was a route through Serhetabat, Shindand, Delaram, Kandahar in Afghansiatan, Quetta, Lora Lai, Dera Ghazi Khan and Multan in Pakistan to India.

Media reports say the pipeline will begin from the Dauletabad gas field in Turkmenistan. Other reports claim the pipeline will begin at Lolotan gas field.

A report in the Economic Times has said that India will pay $13 for buying natural gas through the much-celebrated TAPI gas pipeline and will take indirect responsibility for safe transit of the fuel through high security risk areas in Afghanistan and Pakistan.

The report also says that India on May 23 signed agreement to buy natural gas from Turkmenistan at a rate equivalent to 55 percent of crude oil price which, at $100 a barrel, translates into $9.17 per million metric British thermal unit (mmBtu).

The report also claimed that adding transit fee and transportation charges, the gas through Turkmenistan-Afghanistan-Pakistan-India (TAPI) line would cost $12.99 per mmBtu at the Indian border, three times the price paid to ONGC and Reliance Industries for producing natural gas from domestic fields.

Whatever the price may be, the pipeline will serve to strengthen relations between India and Pakistan, who will both have to take responsibility for its safety and security. This will also build on burgeoning relations with old ally Afghanistan which looks upon India as a bigger brother.

Many questions still remain unanswered. How will Pakistan guarantee the safety of the pipeline passing through their territory? What if it shuts off supply in the case of a standoff with India?

Most experts believe Pakistan has more to lose if it does not trade with India. This pipeline could potentially serve as peacemaking tool between the two countries of India and Pakistan.

A successful TAPI pipeline will prove that Pakistan is a reliable country to trade with. If Pakistan decides to stop gas supply to India, then India can do the same to Pakistan since it has excellent relations with Afghanistan.

Whatever the situation, the status quo will remain the same.