ISLAMABAD: Pakistan and Russia are all set to formally ink a billion dollarenergy deal on Monday for the construction of an offshore gas pipeline andthe supply of gas to Pakistan as Russia wants to export gas to South Asiancountries.
At present, Russia controls and manages huge gas reserves in energy-richIran and Turkmenistan. Russia has also been a prominent gas exporter to theEuropean Union (EU) countries and Turkey despite US sanctions as theEuropean bloc continued to make imports to meet its energy needs. However,due to the Crimea stand-off, Moscow is, to some extent, under the pressureand fears that it may lose energy consumers in Europe. Considering Pakistanand India as alternate markets, Russia is now making efforts to capturethese markets since Russia has shown readiness to export gas by laying anoffshore pipeline through Gwadar Port to Pakistan and India.
Official sources at Petroleum Division on terms of anonymity informed thatfollowing a go ahead by the former federal cabinet under the chairmanshipof former prime minister Shahid Khaqqan Abbasi to formally sign agreementwith Russia for the supply of gas and construction of an offshore gaspipeline, Pakistan’s ambassador to Russia will sign a Memorandum ofUnderstanding (MoU) with Moscow on Monday.
Sources said after the signing of MoU, Russia’s Public Joint Stock CompanyGazprom will assess the viability of the project as Pakistan’s federalcabinet has also allowed the Gazprom to conduct a feasibility study at itsown cost and risk. Russia has already shown willingness to finance thefeasibility study of the project and nominated Gazprom to implement theproject, said sources.
“However, after conducting the feasibility study, the final cost of the gassupply project will be assessed by Gazprom,” said sources.
Sources also said that Inter State Gas Systems (ISGS) – a state-ownedcompany of Pakistan established to handle gas import projects has beennominated by Pakistan to execute the offshore pipeline project along withRussian Gazprom.
The sources added that after the signing of agreements between the twocountries, Russia, which controls and manages huge gas reserves inenergy-rich Iran, and Turkmenistan, will provide gas to Pakistan via Iranand Russian Gazprom will construct the gas pipeline inside Iran andPakistan. They said though Iran has no objection with the Pak-Russia gasdeal, however, Pakistan will have to revive Gwadar-Nawabshah gas pipelineproject to get Russian gas via Iran and for ensuring energy security of thecountry.
It was also learnt from sources that after the construction of the gaspipeline, Russia will initially supply 500 million to 1.5 billion cubicfeet per day to Pakistan while in future, Russia will also be able tosupply gas to India via Pakistan through land or sea routes. They addedthat Russia will also sell Turkmenistan’s and Iran’s gas to Pakistan andIndia via Iran at cheap rates in comparison to the price of LiquefiedNatural Gas (LNG).
Former prime minister Nawaz Sharif during a Cabinet Committee on Energyheld on June 6, 2017, had ordered to stop the $2 billion Gwadar-Nawabshahgas pipeline project although approximately Rs3 billion had already beenspent on the project at the time. However, Chief of the Army Staff GeneralQamar Bajwa during the meeting of the National Security Committee raisedthe matter and, both civil and army leadership unanimously decided tocomplete the construction of gas pipeline project with the cooperation ofRussia.
Official sources at Petroleum Division further informed that PetroleumDivision is mulling over to revive the 700-kilometre long Gwadar-Nawabshahgas pipeline project especially due to recent developments achieved inenhancing relations with Russia in the energy sector. They said aftersigning the defence deal, proposed energy cooperation between the twocountries will usher a new era of cooperation and confidence between Russiaand Pakistan.
Pakistan and Russia had already reached an understanding on signing theoffshore gas pipeline deal during former prime minister Shahid KhaqanAbbasi’s visit to Sochi, Russia. And, at present, the two sides are poisedto ink a memorandum of understanding (MoU) for the offshore pipeline, saidsources.