The commissioning of a $3.2 billion gas pipeline and hydrocarbon exploration activities put Tajikistan at the center of greenfield energy projects in the region
Tajikistan is quickly transforming into a hub for international electro-energy, gas transit and transportation projects. This is largely a result to its unique Silk Road positioning between China, hydrocarbon-rich Central Asia, the Middle East and Afghanistan. By capitalizing on cooperation between regional players, as well as developing its own energy potential, Tajikistan could see a plethora of mega projects transform the country beyond recognition over the next decade.
Energy generation and transmission
There is no doubt that Tajikistan is a country with a wealth of water resources, owing to the approximately 1,300 lakes located in the mountainous country, according to official statistics. Overall this amounts to over 25 cubic miles of water, fed by powerful river flows from the mountains.
One of the reasons for this abundance of water is that the higher reaches of mostly mountainous Tajikistan are packed full of glaciers, with 6% of the country’s territory covered by some 347 miles of permanent ice, mostly located in the Gorno-Badakhshan Autonomous Region (GBAO) in the Pamir Mountains. An example of the scale of this vast frozen wilderness is the Fedchenko glacier, which at 48 miles long, is the largest in the country. It is one of an estimated 8,000 spread across the sparsely populated eastern region of Tajikistan once famously called “the rooftop of the world” by British explorers.
This high altitude, vast ice-bound landscape contributes tremendously to condensation of moisture and increased precipitation. Coupled with the seasonal melting of snow that collects in these frozen highlands, which drains to the lower elevations of the republic, two of the great waterways of the region are born: the Panj and the Vakhsh rivers. These waters flow to neighboring countries and over 50% of the water that feeds into the Aral Sea, shared by Uzbekistan and Kazakhstan, originates here.
Harnessing these rapid downstream water flows for hydro-electric power generation has been a focus of state policy even before Tajikistan became independent. The Nurek hydropower plant (HPP), completed during Soviet times in 1980, is a good example of what can be achieved in combining water and gravity in Tajikistan. It is the second largest man-made dam in the world and the tallest dam in Central Asia, currently generating 300MW of electricity every year. To this day, hydropower remains the dominant source of electricity for the country, due to the proliferation of HPP construction across its rivers and valleys.
“Tajikistan has the capacity to produce around 5,400MW, and currently around 95% of this electricity is produced by hydropower”, explains Usmonali Uzmonzoda, Minister of Energy and Water Resources. This number is set to increase as new projects come to completion, as well as rehabilitation is undertaken on existing assets to improve efficiency.
Over the last decade especially, a number of new hydropower assets have been constructed to increase generation capacity in light of growing consumer. Foreign partners, international organizations, non-government organizations and other stakeholders have become heavily involved in this process as partners or investors.
As the minister of energy highlights, “From 2001 to 2005, with the support of the World Bank, the Agha Khan Fund and the Swiss Government, the reconstruction of Pamir HPP was completed with an increased capacity of 14MW…Private investment from Russia and Iran has done much to improve the conditions of Tajikistan’s energy infrastructure. Over the last 10 years, due to the construction of the 670MW Sangtuda HPP-1 and the 220MW Sangtuda HPP-2, the total capacity in Tajikistan has increased by more than 1,000MW.”
However shortages still exist throughout Tajikistan, especially during the winter months when hydropower generation diminishes, due to the reduced movement of frozen water, which in turn leads to less production through the spin turbines. This unfortunately coincides with an increase in demand for heating and other applications. To address this problem extensive funds have been allocated for the refurbishment of generation equipment and infrastructure in hydropower plants to boost generation. This process is taking place at the Nurek and Kairakkum HPPs as well as at other facilities to enhance efficiency.
Furthermore, a strategy of diversification has been implemented by turning to coal, a resource the country has in significant quantities. In line with this approach, a new thermal coal power plant has been built in Dushanbe, and plans are in place to build a similar plant in the country’s far north, near the city of Isfara. The northern part of the country is particularly coal-rich, a factor that improves the economic feasibility of this alternative source.
The establishment of the north-south transmission line, a 165-mile power line that links the two most populous regions of the country, has also done much to balance electricity supply by moving voltage between areas in need. This was made necessary by Tajikistan’s disconnection from the Central Asia grid in 2009.
One issue also being addressed in terms of improving access to domestic distribution is revitalizing the ageing distribution network. Barki Tojik (Tajik Electricity), the national distribution company, currently faces widespread evasion of payment from customers. A feasibility study is currently underway to modernize the system and install digitalized meters to better monitor usage. Mr. Uzmonzoda describes the process as aimed at, “working to increase the commercial efficiency and grow the future potential of Barki Tojik. To do this we need to decrease energy losses, improve commercial returns and upgrade our infrastructure.”
Revenues gained from this process will be used to upgrade substations and transformers, with an overall goal of improving distribution efficiency and capacity by renewing outdated infrastructure.
One lasting solution for solving Tajikistan’s electricity demand, that would also produce the volume of power needed for industrial development, is the Rogun Hydropower Plant project. When completed, this would be the highest dam in the world. According to the World Bank, the construction of this dam “is part of a lower cost solution to meeting Tajik electricity demand than any of the non-Rogun alternatives”.
“I think the continuation of the construction of Rogun HPP is very important in resolving this issue,” says Mr. Uzmonzoda. “Its capacity will be 3,600MW and not only will it improve the situation during the winter period domestically, but we will be able to export the excess energy it generates to South Asia, including Pakistan, Afghanistan and Iran during summer.”
A tender announcement was made at the end of February this year, with a view to launching final construction by the second half of 2016. The Rogun HPP is intended to be completed by 2027.
It is interesting to note that Tajikistan currently produces an excess of electricity in during summer due to strong water flows. Last year the country was able to export this excess capacity to northern Afghanistan. Plans are in place to expand this practice by capitalizing on extra supply and demand elsewhere in the region.
Combined with excesses electricity supply produced in Kyrgyzstan, and demand for power in Afghanistan and Pakistan, a regional electricity export project is being finalized. Negotiations for this endeavor, the CASA-1000 project, began in 2009 and transit and tariff issues have been agreed on among the participating countries. Now the project has advanced to the point of securing financing, with a number of interested parties already committing funds.
As the energy minister told United World, “A loan from the World Bank has been approved which will provide $45 million to Tajikistan’s portion of the project with $15 million being provided by the Tajikistan Government and another $7.5 million provided by USAID. We have had preliminary discussions with the Islamic Development Bank for an additional $70 million loan and European Investment Bank for €75 million ($84 million) as well. We have also talked with the Kuwait Fund, and they have also agreed to provide funding. Negotiations are underway with other banks to secure around $320 million in total.”
Combined with the realization of the Rogun HPP, the CASA-1000 project will lay the groundwork for Tajikistan to become a significant supplier of clean, hydropower energy to its southern neighbors.
Line D and the search for hydrocarbons
It is no secret that China’s interest for Central Asia’s hydrocarbons, in particular natural gas, has become voracious. This interest has manifested itself most tangibly during a series of energy mega projects, beginning in 2009 with the commissioning of phase one of the Central Asia–China gas pipeline (CACGP). At the time of writing, a network of three pipelines crisscrossing Central Asia (originating in Turkmenistan and passing through Uzbekistan and Kazakhstan) deliver more than 50% of China’s natural gas imports.
Most of this supply originates from gas-rich Turkmenistan and is carried over thousands of miles of pipelines, bypassing the mountains of Tajikistan and Kyrgyzstan, to Western China. However this situation has changed following the development of the Galkynysh gas field (also known as South Yolotan field) in Eastern Turkmenistan. Thought to be one of the largest gas fields in the world, production from Galkynysh has prompted the beginning of construction of a new, fourth pipeline. Importantly for the future of Tajikistan, this line will take a far less circuitous course than its predecessors.
Rather than spanning the deserts and relatively flat lands of Central Asia, the significantly shorter Line D of CACGP, will take a more direct route by crossing briefly into Uzbekistan and cutting through the mountainous territory of Tajikistan and Kyrgyzstan. Consequently its estimated length is 620 miles, half the length of the most direct of the previous pipelines. The longest stretch of the line will be constructed in Tajikistan, offering the country the biggest investment seen since independence, as well as job creation and substantial revenues.
“This length of the section of this pipeline on the territory of Tajikistan will be around 255 miles,” explains Mr. Uzmonzoda. “Approximately $300 million will be provided from Chinese banks to Tojiktranzgas (a state-owned gas company), and a total of $3.2 billion will be invested in realizing the project. According to the standing agreements Tajikistan will not utilize the gas, but instead will receive transit fees and tax revenues.”
Annually some 30 billion cubic meters will be exported from this pipeline. This amount equals the production capacity of the first phase of the Galkynysh field, meaning that the completion of the project should increase Central Asian gas supplies to China by around 50%, a dramatic leap forward for the region’s economy.
Work began on Tajikistan’s section of Line D on September 13, 2014. During a ceremony in Rudaki District, south of Dushanbe, President Emomali Rahmon, and Xi Jinping, President of the People’s Republic of China, signed the final agreements and hosted the official groundbreaking. It is there, close to the Uzbek border, that the Tajik section of the line begins as its neighbor’s ends.
The Chinese National Petroleum Corporation (CNPC) is working in cooperation with Tojiktransgaz to carry out the project. In partnership with Tojiktransgaz, the newly established CNPC subsidiary, the Trans-Asia Gas Pipeline Company, will guide both the construction and operational phases of the project. For the time being, the challenges of construction remain at the forefront, due to the mountainous topography of the country that poses an array of challenges to project planners.
According to the energy minister, “The detailed design-survey works are ongoing at this time, and we had solved all questions concerning land acquisition. CNPC and Tojiktransgaz have already started work in Rudaki district. Now they are creating designs for tunnels, because more than 47 miles of the pipeline will literally go through mountains. It is a very challenging project from a technical perspective.”
During the groundbreaking event in Rudaki District, President Rahmon himself highlighted the unique engineering feats that will have to be carried out to complete the project, including that “In 24 (out of a total of 47) of these cases, the tunnels will be underwater”.
The effect of the construction phase on the local economy cannot be understated. It is estimated that around 3,000 jobs will be created as a result, with a further flow on to subcontractors and suppliers. The project is forecast to be completed by late 2017.
Looking beyond the significance of Line D as an energy transit project, no significant hydrocarbon discoveries in Tajikistan have been made public to confirm that the country has its own sizeable oil and gas reserves. The country is currently heavily dependent on imports, with 90% of its oil and gas supplied from abroad. The geology is positive however, as the wider region has borne witness to, and optimism abounds in industry circles. However, a lack of investment in exploration since the collapse of the Soviet Union, until very recently, has delayed development.
Tajikistan has two established oil and gas basins on its territory. The Fergana Basin, in the north, has been producing oil since 1900 and extends over Uzbekistan, Kyrgyzstan and Tajikistan. The Tajik-Afghan Basin stretches over the southwestern part of Tajikistan. It is an extension of the Amu Darya Basin, which has generated substantial finds including Galkynysh in Turkmenistan, the origin point of Line D.
There are currently several significant operations underway to access these basins. These include those of the Russian energy giant Gazprom, which has drilled the deepest prospecting well in Central Asia, some four miles deep, just 30 miles from the country’s capital.
In addition, a number of multinational operators have undertaken oil and gas exploration or development activities in Tajikistan, focused on both the southern and northern basins. These include CNPC, Total, MNP Petroleum Corporation (through its majority stake in Somon Oil), Energy Partners Austria, and Tethys Petroleum.
Better international transportation connections
Establishing better transportation links, both domestically and internationally, has been one of the government’s priority focuses for Tajikistan’s development.
One major improvement to the country’s international transportation infrastructure was the opening of the new terminal of Dushanbe International Airport in September 2014, built with the financial and technical support of the French government. The commissioning of this modern facility has greatly increased the capacity to receive passengers as well as improving comfort. This terminal has extended the size of the airport’s facility by over 118,000 square feet, catering to an additional 1.5 million passengers per year. Similar renovations are taking place in the country’s other international airports located in the cities of Khujand, Kulyab and Kurgan Tyube.
Somon Air, Tajikistan’s first private airline, has seen consistent growth in recent years, as well as an improvement of service. Its fleet is made up of Boeing aircraft with internationally experienced staff ensuring and maintaining international safety standards. It currently flies to over 20 destinations internationally and is the official carrier of the Office of the President.
Soviet planners developed overland transport access to Tajikistan via neighboring Uzbekistan, as the latter formed a central hub during this period. As a result, prior to independence, there were only limited international routes available to the country. However, this situation has dramatically changed since independence, following the establishment by Tajikistan’s government of eight international highways to neighboring countries. These include roads to the Kyrgyz Republic, Uzbekistan, Afghanistan and China.
The mountainous, high altitude conditions of much of the country present a number of challenges in road construction. A symbol of this is the M41 Highway, popularly known as The Pamir Highway. This scenic route, now popular with tourists, connects Afghanistan, Uzbekistan, Tajikistan and the Kyrgyz Republic. It stretches the breadth of Tajikistan and straddles the Chinese border. It is in this high, remote area of Tajikistan’s east that new roads and international border crossings link the country to China.
To the south, bridges have been built spanning the Panj River that makes up most of the 800-mile border between Tajikistan and Afghanistan. During Soviet times, no border crossings or bridges existed between the two territories.
Not surprisingly given Tajikistan’s role in stabilizing Afghanistan, the U.S. government has supported efforts to integrate the economies of the two countries. The bridge at the Panji Poyon (Lower Panj) border checkpoint, located approximately 60 miles south of Dushanbe, was financed by the U.S. Army Corps of Engineers. This impressive, 2,200-foot concrete bridge provides an important commercial link for trade between the two countries since its completion in 2007.
The Tajikistan–Afghanistan Friendship Bridge is also a case in point. Completed in 2004, it links Khorog, the capital of the Gorno-Badakhshan Autonomous Region, to the Badakhshan Province of Afghanistan. This suspension bridge was built by the Aga Khan Development Network, supported by the Norwegian and U.S. governments.
The upgrading and construction of domestic overland transport infrastructure has had an equal, if not greater impact on the economy of Tajikistan. Such connections, including tunnels, have played an important role in maintaining national unity. Prior to the completion to the Anzob and Shakhristan tunnels, it was necessary to drive overland through Uzbekistan to travel between the north and south of the country. The completion of these tunnels, made possible through foreign partnership, thus played a huge role in expanding internal connectivity.
Railway has played an important role in Tajikistan’s transportation system since 1929, when the first national railway was established here by Soviet officials. Today, Tajikistan has some 600 miles of railway, managed and operated by Rohi Ohani Tojikiston (Tajikistan Railways). The last quarter of 2014 saw the beginning of construction to join the Central Line to the Southern Line through the connection of the cities of Vahdat and Yavan. The distance of just 25 miles may seem insignificant, but the topography presents challenges for project specialists. In fact the difficult terrain necessitates the construction of three tunnels and 11 bridges.
This link in rail connections allows for greater projects of international significance to become viable. Foremost amongst them is the Turkmenistan–Afghanistan–Tajikistan railway project. Through the connection of the Southern and Central Lines, Dushanbe will be connected to the southern city of Panj, close to the Afghan border. From here a line can be constructed to the northern Afghan city of Mazar-i-Sharif and northwards to Turkmenistan. The actual distance is not far, less than 100 miles.
The successful completion of this ambitious project would greatly reduce the cost of import/export for landlocked Tajikistan. By connecting Tajikistan’s railway network to Turkmenistan’s, Tajikistan would be able to freight goods by rail from ports on the Persian Gulf. Such a move would greatly reduce the very expensive logistics costs currently afflicting the country and also greatly improve the speed of delivery.
Planners have also long considered the idea of connecting Tajikistan’s railway network to China via Kyrgyzstan. If the Turkmenistan–Afghanistan–Tajikistan Railway becomes a reality it would provide tremendous incentive to complete the link with China. Such a connection would then allow rail freight to be transported overland from China, through Tajikistan to the Middle East, and vice versa, offering lucrative commercial opportunities for the entire region.
Projects to boost power generation, the CASA-1000 electricity export project, the commissioning of Line D of CACGP, energy exploration and trans-national transportation linkages present a positive future for Tajikistan. Not only would the successful realization of these projects make Tajikistan a central hub for the transit of commodities and goods, but it would better integrate the country into the regional economy. Such a move would promote stability in neighboring countries including Afghanistan and create the basis for large-scale regional cooperation.