Pakistan, Russia sign North-South gas pipeline deal

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ISLAMABAD: Pakistan and Russia yesterday inked $2 billion North-South gas pipeline project with an additional capacity for LNG covering some 1100-kilometre link from Karachi to Lahore. Russia would be building the project with an estimated cost of $2 billion and its first phase would be completed by 2018. Prime Minister Nawaz Sharif witnessed the signing ceremony of Inter-Governmental Agreement on the North-South Gas Pipeline which aims to transport gas from South to North Pakistan.

From Pakistan side Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbassi while from Russian side Energy Minister Alexander Novak signed the agreement. On the occasion Prime Minister Nawaz Sharif said that the growing cooperation between Pakistan and Russia would help a great deal in fulfilling Pakistan’s energy requirements. Under the inter-governmental agreement, the Russian Federation through its state corporation RT-Global Resource will collaborate with Pakistan’s Inter-State Gas System (Pvt) Ltd for the laying of the pipeline.

The pipeline with a capacity of 12.4 billion cubic metre per annum will connect Karachi’s liquefied natural gas (LNG) terminals with those in Lahore. The period of construction is 42 months and energy project will be implemented in three stages. On the first stage, by the second quarter of 2018, the gas pipeline will be built. On the second stage, by the second quarter of 2019, part of compressor stations will be completed. On the third, by the second quarter of 2020, all compressor stations will be commissioned bringing the pipeline to its full capacity, which is 12.4 billion cubic meters a year.

This is the first such visit by a Russian energy minister to Pakistan in three decades. Both sides reviewed the overall state of bilateral energy cooperation between the two countries, the possibility of greater Russian investment in Pakistan’s oil and gas sector and exchanged views on the North-South gas pipeline which would mark a new milestone in the bilateral energy cooperation between both countries. After the signing ceremony, Shahid Khaqan Abbasi informed media the project was of great significance for Pakistan as it would help carry the additional volume of imported gas from the country’s South to rest of the country.

He said the pipeline would develop a proper mechanism for the transportation of gas from South to other parts, for which no system existed at present. He said the North-South pipeline project was part of the government’s vision to fulfil the country’s energy needs on priority basis. He said China was also expected to collaborate in execution of the gas pipeline project, which will be completed in 30 months. The project will be capable of transporting 1.2 billion cubic feet of gas from Karachi to Lahore by laying 42-inch diametre pipeline. The first phase is expected to be completed by December 2017.

The Economic Coordination Committee (ECC) had approved the North-South Gas Pipeline Project under government-to-government agreement in January 2015. The draft inter-government agreement was approved by Prime Minister Nawaz Sharif in July 2015. The ECC had designated Inter-State Gas System (Pvt) Ltd as the executing agency to implement the project in liaison with Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL).

Other members of the Russian delegation included Executive Director Kulikov SA, General Director of RT Global Resources Korobov AV and other senior energy and technical experts. From Pakistan side, the meeting was attended by Shahid Khaqan Abbasi, Minister of State for Petroleum Jam Kamal, Special Assistant to PM Tariq Fatemi, Secretary Petroleum Arshad Mirza and other senior officers from Petroleum Ministry and PM Office. Agencies add: Russia is to invest about $2 billion in the pipeline and its first phase is expected to be completed by December 2017, a senior government official told AFP.

Rostec, run by a close friend of Russian President Vladimir Putin, would finance, own and operate the pipeline for 25 years. The Pakistani side undertakes to grant the rights to use land plots necessary for the project implementation and carry out research route laying works. The line will reach its project capacity by early 2020, Russia’s Energy Ministry said in a separate statement. China is currently financing the construction of a gas pipeline from Nawabshah to the deepwater port of Gwadar, not far from Iran. Once that is built, Pakistan will “only have to build another 80 kilometres” of pipeline to link up to Iran, and could eventually extend the project as far as its northern border with China.

 

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