Gas pipeline projects : Pakistan to woo Russian energy giant

Islamabad bound to receive first flow of gas from Iran in 2014.

KARACHI:

Pakistan will make an offer to Russian energy giant Gazprom, the largest extractor of natural gas in the world, to participate in two multi-billion-dollar gas pipeline projects - Iran-Pakistan (IP) and Turkmenistan-Afghanistan-Pakistan-India (TAPI) projects, during President Asif Ali Zardari’s visit to Russia.

Prime Minister’s Adviser on Petroleum and Natural Resources Dr Asim Hussain, who is accompanying the president, will brief the Russians about progress on the gas pipeline projects.

Secretary Petroleum Ijaz Chaudhry said that a memorandum of understanding (MoU) on energy cooperation with Russia would also be signed to engage Russian companies in oil and gas exploration in Pakistan.

Gazprom had shown interest in building energy storage facilities in Pakistan. During a meeting of the Pak-Russia Inter-Governmental Commission held in September last year in Russia, Pakistan had invited Gazprom to lay a pipeline for the IP gas project.

Pakistan and Iran had already signed a sovereign guarantee agreement on IP project. The project will cost Pakistan approximately $1.25 billion. In addition, Pakistan and Iran had signed a Gas Sale and Purchase Agreement for import of 750 million cubic feet per day (mmcfd) of natural gas with a provision to increase gas volume to one billion cubic feet per day (bcfd).

Under the guarantee agreement, Pakistan was bound to receive the first flow of gas in 2014 and will have to pay a penalty of $8 million per day if it fails to receive gas in the stipulated time period.

Talks on the TAPI gas pipeline project are scheduled to be held in Afghanistan from May 17-18 to develop a consensus on gas pricing formula and transit fee.

Published in The Express Tribune, May 12^th, 2011.