Pakistan, Russia meet today to discuss $2b LNG project

Published: January 19, 2016
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During the talks, Russian side would update the Pakistani side about the sanctions imposed against RT Global. Officials said that Russia could replace RT Global with some other company which was not facing US sanctions. PHOTO: FILE

During the talks, Russian side would update the Pakistani side about the sanctions imposed against RT Global. Officials said that Russia could replace RT Global with some other company which was not facing US sanctions. PHOTO: FILE

ISLAMABAD: Pakistan and Russia are set to meet in Moscow today (Tuesday) to discuss the course of action on implementing the $2-billion LNG project after the US imposed sanctions against the Russian energy firm designated to build the pipeline.

Pakistani side will also negotiate a LNG supply deal with Russian firm Gazprom.

Pakistan’s $2 billion LNG pipeline project hits a snag

Petroleum Minister Shahid Khaqan Abbasi will lead the delegation which comprised of Interstate Gas Systems (ISGS) Managing Director (MD) Mobin Saulat and Ministry for Petroleum Joint Secretary Tauqeer Hussain.

Russia had signed a government-to-government (G2G) deal with Pakistan to lay the $2 billion North South Pipeline from Karachi to Lahore to transport imported LNG and nominated RT Global to implement the project.

Russian President Vladimir Putin was to visit Pakistan to perform the ground breaking ceremony of the project for which Moscow will lend Islamabad $2 billion

However, US imposed sanctions against RT Global, causing bottlenecks to implementing $2 billion LNG pipeline project. Pakistan’s Interstate Gas Systems (ISGS) and Russia’s RT Global were supposed to sign a commercial agreement to implement the project.

During the talks, Russian side would update the Pakistani side about the sanctions imposed against RT Global. Officials said that Russia could replace RT Global with some other company which was not facing US sanctions.

Karachi to Lahore pipeline: Pakistan, Russia seal $2 billion energy deal

The firm, which is a Russian State Corporation, was to lay the 1,100-km-long pipeline with a capacity of 12.4 billion cubic metres (bcm) per annum to connect LNG terminals in Karachi with those in Lahore. Under the agreement, Pakistan would provide 15 per cent equity whereas 85 per cent funding would be provided by the Russian firm. The first phase of the project is expected to conclude by December 2017.

Pakistan has worked on a similar model with China under which a Chinese firm would lay the Gwadar LNG pipeline to Nawabshah and build an LNG terminal at the deep-sea port at a cost of $2.5 billion.

LNG supply deal with Russia

The financing for the LNG pipeline by Russia comes as a result of Russia’s eagerness to sell LNG to Pakistan. Russia is the second-largest producer of natural gas in the world, and was seeking to diversify its export markets after a spat over Ukraine with the European Union, its main buyer.

During talks, two sides would also discuss LNG supply deal on a G2G basis. Gazprom had expressed interest to supply LNG to Pakistan. Pakistani side had informed Russian side that there was a need of 4.5 metric tons per annum of LNG from the second quarter of 2017. Pakistan has recently awarded contract of 60 LNG cargoes to Gunvor.

LNG pipeline, terminal: Govt to decide on Chinese firm’s bid in a month

LPG air mix plants

Two sides will also discuss plan of setting up LPG-air mix plants by Russian company. Russia had nominated RusGaz Engineering and targeted commissioning timelines of May 2016.These plants would be set up in areas where pipeline network was not available to supply gas.

Published in The Express Tribune, January 19th, 2016.

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Reader Comments (8)

  • Khan
    Jan 19, 2016 - 10:08AM

    Can we kindly first go ahead & complete the Iran-Pakistan gas pipeline? The sanctions have been lifted, we shouldn’t have any excuses now!!Recommend

  • Ilyas
    Jan 19, 2016 - 10:43AM

    The Americans will go to great lengths to disrupt
    Pakistani progress. They cannot accept a strong
    Pakistan economically and that will cause them to have lesser control over Pakistani policies.

    Look at other countries as examples of progress.

    I hope the politicians stop being corrupt, and take these great opportunities to develop Pakistan into a vibrant nation. These leaders need to stop thinking about only their bank balances. The country has been looted enough, time to serve your nation and do some good that may just help you in the hereafter. Recommend

  • abreez
    Jan 19, 2016 - 11:03AM

    Pak-Russia relations are very important for Pakistan and Pakistan must look at bigger picture. Now when world is witnessing negative effects of global warming in near future there will be positive effects of global warming and one of them will be ‘land route’ from China to America via Mongolia and Russia (Russian cities of Ulan-Ude, Chita, Skovorodino, Tynda, Yakutsk, Uelen then by crossing Bering Strait to Alaska from there to Canada. People will be able to travel by rail at 300Km/h speed, more people will be involve in world’s economic recovery. Pakistan must give Russia and Central Asian states an opportunity to build rail and road links with Mid-East and Africa.Recommend

  • Abdul Majid
    Jan 19, 2016 - 11:19AM

    Agreed. With the Iranian frozen accounts also rehabilitated, it should not be difficult to fund the project.Recommend

  • abdullah
    Jan 19, 2016 - 12:04PM

    @khan.All sanctions have not been removed.still alot are in place.it wont happen so quick.Recommend

  • Raj - USA
    Jan 19, 2016 - 7:27PM

    There was a news about two year ago that Turkey will be giving Pakistan some 6 or 8 F-16’s and that US had already allowed the deal. Did not read anything on it later. What happened? Did the deal go through?
    Now, with Pakistan in the group of 34 countries making up the Saudi led alliance, it is possible that Pakistan may get some F-16’s from some of these countries in the group.Recommend

  • curious2
    Jan 19, 2016 - 8:57PM

    The financing for the LNG pipeline by Russia comes as a result of Russia’s eagerness to sell LNG to Pakistan
    .
    How does Russia realistically compete with ME gas? It’s about 650 nautical miles from Qatar to Gwadar. It’s almost 9,000 nautical miles from Russia to Gwadar which takes over 37 days for an LNG tanker. Under normal circumstances I wouldn’t see this as a realistic possibility – but kickbacks/bribes seem to make the impossible happen in Pakistan.Recommend

  • Abdullah khan
    Jan 19, 2016 - 10:06PM

    The easiest route to russia and all the world mentioned by above, is peshawr, dir chitral wahkhan Tajikistan Recommend

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