Energy: Pakistan, Russia sign $10 bn gas pipeline agreement

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By Muhammad Luqman

As a major sign of shift in its seven decades long west-centered foreign policy, Pakistan has signed an inter corporate agreement for the laying of more than 1,500 km offshore gas pipeline costing $10 billion that would be transporting natural gas from the Russian gas company Gazprom’s sources in the Middle East to Pakistan with possibility of extending it further to South Asian countries including India.

Mobin Saulat, Managing Director of Inter-State Gas Systems (ISGS), a state-owned company with the mandate to build gas pipelines and gas import projects, and Vitaly A Markelov of Russian Gazprom Gas Company signed this Inter Corporate Agreement (between companies)  in the capital, Islamabad.

Initially, the feasibility study of this $10 billion offshore gas pipeline project would be carried out by Gazprom. The pipeline would follow an integrated approach, including other ancillary projects such as Under Ground Gas storage, desalination and other power projects.

Pakistan will import some 500 million to one billion cubic feet of gas per day  from these Russian sources, which would be transported via sea link, according to the media reports. The pipeline construction is expected to be completed by the year 2023.

Russia holds huge gas deposits in Bahrain, Qatar and other Middle Eastern countries and had offered Pakistan and India gas exports by laying the offshore pipeline that would be passing through Gwadar.

A Russian delegation headed by Vitaly A. Markelov, Deputy Chairman of the Management committee, PJSC, ‘Gazprom’ International, visited the Petroleum Division in the capital, Islamabad and held a meeting with Petroleum Minister Ghulam Sarwar Khan and other government officials.

According to a statement, federal Petroleum Minister Ghulam Sarwar Khan appreciated the expanding trajectory of bilateral relations between Russia and Pakistan. Khan welcomed Gazprom’s interest in offshore gas pipeline project and termed it a manifestation of multifaceted cooperation between both countries.

The Russian side thanked their Pakistani counterparts for the facilitation being extended in preparing necessary groundwork for the project and renewed their commitment to deepening energy cooperation between both sectors.

Pakistan’s energy demand is multiplying in the wake of China Pakistan Economic Corridor (CPEC) and industrialisation drive. It would meet its demands to a large extent through this project. Besides, it would place Pakistan on the world map as transit country for offshore gas pipelines.

According to energy experts, the gas Pipeline has been planned by the Russian government to make way into Pakistani energy market. Pakistan has been experiencing gas crisis, particularly in winter, for the past many years as domestic production has declined with new additions being offset by depleting old deposits. In a bid to tackle the crisis, the PML-N government started liquefied natural gas (LNG) imports from Qatar under a 15-year agreement and brought supplies from other sources as well.

The ISGS is also working on the Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline. It has also been designated by Pakistan for executing the pipeline project along with Russia’s energy giant Gazprom.

The under-construction CPEC is making the region more important for foreign investors. Special Economic Zones (SEZs) are being constructed under the CPEC to boost industrialisation in the country.

Russia has nominated Public Joint Stock Company, Gazprom, for implementation of the project. Pakistan’s cabinet has permitted the company to conduct the feasibility study at its own cost and risk.

The ISGS is also working on the $10 billion Tapi gas pipeline, which will connect South and Central Asia regions. Construction work on the project  Pakistan is planned to start in March 2019. These projects are termed game changer for Pakistan’s energy-deficient economy.

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