Energy cooperation Pakistan and Kuwait set to sign MoU

Kuwait to offer financial and technical assistance for gas pipelines.

Zafar Bhutta May 06, 2011


Pakistan and Kuwait will sign a Memorandum of Understanding (MoU) on energy cooperation, under which Kuwait will extend financial and technical assistance for two major gas import initiatives - Iran-Pakistan (IP) and Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline projects.

The MoU will be signed during the official visit of President Asif Ali Zardari to Kuwait beginning May 7. Pakistan is currently importing oil from Kuwait on 60-day deferred payments. Pakistan had earlier required extension in oil import on the deferred payment facility from 60 to 90 days but Kuwait declined the request.

Sources said the petroleum ministry had no proposal during the president’s visit to seek extension in oil imports on deferred payment and that it had already discussed with the Kuwaiti government financing for IP and TAPI gas pipeline projects.

Under the MoU, Kuwait will also extend cooperation with the Geological Survey of Pakistan (GSP) and will invest in oil and gas sectors to increase output to meet domestic requirements of Pakistan.

Pakistan has signed Gas Sales Purchase Agreement (GSPA) with Iran for the IP pipeline and awarded a consultancy contract to Germany-based firm ILF, which would work with the National Engineering Services of Pakistan (Nespak). The consultancy contract has been divided into two phases, costing $55 million.

Iran has laid a 900-kilometre pipeline and has completed a survey to lay pipeline on the remaining 250 km to connect with Pakistan’s border. Pakistan will lay a 785km pipeline that would cost $1.24 billion. Under the IP project, 750 million cubic feet per day (mmcfd) of gas will be imported from Iran to generate power.

Under the TAPI gas pipeline, 3.2 billion cubic feet per day (bcfd) of gas will be imported from Turkmenistan – which will be shared by Afghanistan, Pakistan and India. The project is estimated to cost $7.6 billion.

All participating countries are scheduled to meet in Afghanistan on May 13-14 to resolve the issue of gas pricing and finalise GSPA which will be signed by July 31.

Published in The Express Tribune, May 6th, 2011.


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