ISLAMABAD: Pakistan and Russia have reached an understanding to sign a multi-billion dollar offshore gas pipeline deal in a couple of weeks, ignoring pressure from the United States that has fiercely opposed the building of Iran-Pakistan (IP) gas pipeline for years.
The two sides reached an agreement during the recent visit of Prime Minister Shahid Khaqan Abbasi to Moscow.
The two sides were expected to sign a Memorandum of Understanding (MoU) during the premier’s visit, however, it did not happen due to certain reasons, officials told The Express Tribune. Now, Islamabad and Moscow are set to sign the deal in a couple of weeks.
Russia, which controls and manages huge gas reserves in energy-rich Iran, plans to export gas to Pakistan and India by laying an offshore pipeline. This move comes as an alternative, amid Moscow’s fears of losing energy markets in Europe following a long tussle with the United States and the European Union over the annexation of Ukrainian region of Crimea.
Following Donald Trump’s South Asia Policy on Afghanistan – where it wanted to give a role to India in this region, a proposal Pakistan rejected – Pakistan-US relations are at a critical point. Such massive business deals would open a new avenue for diplomatic relations between Russia and Pakistan, said a senior government official.
Official said that after signing of the MoU, work on feasibility would be started to know the viability of the project. Russia is even ready to finance the feasibility study on viability of the offshore pipeline.
The official pointed out that the US knew about the gas reserves held by Russia in Iran, which was the reason why Washington opposed the IP gas pipeline. The IP project will open an avenue for Russia to lay a parallel pipeline for gas export to Pakistan and India.
The official revealed that India was also interested in purchasing gas from Russia through the offshore pipeline from Iran via Gwadar, believing it was a safe way for energy import.
Earlier, India was part of the IP gas pipeline, but after entering into a civil nuclear deal with the US, it pulled out apparently on the insistence of Washington, which has strained relations with both Iran and Russia.
Now, India has expressed its keenness in preliminary discussions on the offshore pipeline, but it is believed that the US will again heap pressure to force Delhi to stay away from its rivals.
Russia has been a big gas exporter to EU countries and Turkey since long and despite US anger the European bloc has continued to make imports to meet its domestic needs.
Russia receives gas from Turkmenistan and then exports it to EU states. It has managed to get gas deposits in Iran as well and is looking to gain foothold in the markets of Pakistan and India.
Russian gas exports touched an all-time high in 2017. According to its energy giant Gazprom, gas flows to Europe and Turkey, excluding former Soviet states, hit a new daily record at 621.8 million cubic metres.
Annual exports touched 179.3 billion cubic metres (bcm) in 2016, a significant jump from the previous high of 161.5 bcm in 2013 and well above the 2015 total of 158.6 bcm.
Published in The Express Tribune, December 9th, 2017.