Pakistan, Russia sign agreement for construction of North-South gas pipeline

Published October 16, 2015
Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi and Russian Energy Minister Alexander Novak ink the agreement─ Photo courtesy: PID
Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi and Russian Energy Minister Alexander Novak ink the agreement─ Photo courtesy: PID

ISLAMABAD: Pakistan and Russia on Friday signed an inter-governmental agreement for the construction of a gas pipeline from Lahore to Karachi, Radio Pakistan reported.

Russia will invest $2 billion in the project, the first phase of which is expected to conclude by December 2017.

The 1,100 kilometre 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 agreement was jointly signed by Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi and Russian Energy Minister Alexander Novak in a ceremony attended by Prime Minister Nawaz Sharif.

Related: Pakistan, Russia sign landmark defence deal

The period of construction is 42 months and energt project will be implemented in three stages, Russia’s TASS news agency said in a report.

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 stage, 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.

The construction of the pipeline will provide orders for Russian industrial enterprises and will contribute to an increase in non-oil exports. The project will open up a new market for Russian companies.

The project will be implemented in compliance with BOOT model (Build Own Operate Transfer). The built pipeline will be owned and operated by the project company for 25 years. During this period payments for gas deliveries will help the company return the investments and make profit. After that the pipeline will be handed over to the government of Pakistan.

Currently, RT-Global Resources is conducting surveys and engineering work along the pipeline route. According to Andrei Korobov, general director of RT-Global Resources, the project’s implementation will imply maximum involvement of Russian producers and contractors. In particular, Rostec considers attracting the United Engine Corporation as a supplier of equipment for compressor stations of the future pipeline, he said.

Pakistan’s state gas supplying company ISGAL acts as a partner customer in the project and will pay gas transportation services. In its turn, the government of Pakistan will issue a sovereign guarantee for project financing.

The Russian side is considering possibilities to attract loans from Russian and Chinese development banks with the support of export credit agencies.

RT-Global Resources will create a consortium uniting Russian and foreign investors including Chinese and Pakistani ones as well as potential contractors," the corporation said in the statement.

Prime Minister Nawaz Sharif and Russian President Vladimir Putin while meeting on the sidelines of the Shanghai Cooperation Organisation summit in Ufa earlier this year discussed progress on the North-South gas pipeline agreement and had decided to expedite progress on the project.

Nawaz had also remarked that Pakistan wished to develop a multi-dimensional relationship with Russia in the fields of trade, defence, energy, infrastructure, culture and other spheres.

In August, Pakistan and Russia signed a landmark defence deal for the sale of four Mi-35 ‘Hind E’ attack helicopters to Pakistan and are currently in talks about the delivery of Sukhoi Su-35 fighter jets.

Also read: Pak-Russia talks on delivery of Su-35, Mi-35s underway: Russian Deputy FM

Opinion

The ECI headache
08 May 2021

The ECI headache

The ECI sat mute while BJP held huge rallies without following SOPs.
Engaging the enemy
08 May 2021

Engaging the enemy

The ghost of the Musharraf formula has started to haunt the current backchannel process.
Will OIC confront France?
Updated 08 May 2021

Will OIC confront France?

For Pakistan to keep its GSP-Plus status it will have to show the EU that it treats its blasphemy accused fairly.
Standing by Kashmir
Updated 07 May 2021

Standing by Kashmir

A comprehensive failure of governance is always a comprehensive moral failure of the governors.

Editorial

Updated 08 May 2021

Delayed poll debate

THE debate on electoral reforms is going nowhere. Even though the major political parties say reforms are critical,...
08 May 2021

Reducing deficit

THE numbers show that the government has managed to arrest growth in fiscal deficit — the difference between the...
08 May 2021

Rise in dog bites

ON Wednesday, an unusually high number of dog-bite cases were reported in Larkana, when 19 people — the majority ...
Reprimanding envoys
Updated 07 May 2021

Reprimanding envoys

The prime minister should have engaged with honest and respectable officers to identify how solutions can be found.
07 May 2021

Foreign funding case

THE foreign funding case against the PTI has become a never-ending tale. It has been dragging on for years and after...
07 May 2021

Water woes

IRRIGATION experts have voiced concern over the decline of freshwater flow through Kotri barrage, which has led to...