Russia expresses keen interest in NSGPP

Russian President Vladimir Putin has expressed keen interest in the North-South Gas Pipeline Project (NSGPP), which he wants Pakistan to initiate work on as soon as possible.

According to sources, the Petroleum Division while reviewing the project status in a recent meeting informed that the Ministry of Foreign Affairs had reiterated the importance of the NSGPP and the Russian president’s personal interest to “initiate work on the project at the earliest”.

“This project is demonstrative of strategic engagement with the Russian Federation,” the Petroleum Division official said, quoting the Ministry of Foreign Affairs.

Pakistan and Russia had signed an agreement in October 2015 to build a gas pipeline from Karachi to Lahore.

Russian Energy Minister Alexander Novak and Petroleum Minister Shahid Khaqan Abbasi signed the agreement at a ceremony witnessed by the then Prime Minister Nawaz Sharif.

Pakistan had nominated Inter-State Gas Systems (ISGS) whereas Russia had nominate RT-Global Resources - a part of Russian state corporation Rostec – to build the NSGPP.

However, the project hit a snag when the United States slapped sanctions on the Russian firm, RT-Global, in 2016. Since then, the Russian side has changed the structure of the firm six times to avoid sanctions but no success has been achieved so far.

Pakistan and Russia signed a protocol in January this year assigning the project implementation rights to North-South Gas Pipeline (Private) Limited – a joint venture between the Eurasian Pipeline Consortium and Federal State Unitary Enterprise (FSUE) Centre of Operations Services of the Russian Ministry of Energy. ETK was part of the consortium to implement the project.

Earlier, Special Assistant to Prime Minister Nadeem Babar told the media that the cost of NSGPP had been increased as its route and diameter of the pipeline has changed.

He said that the capacity of gas transmission was also enhanced from one billion cubic feet per day (bcfd) to 1.6 bcfd that would be extendable to two bcfd keeping in view the future need of gas, which could reach up to three bcfd in the next 10 years.

He had said that Pakistan had nominated a technical committee and was waiting for Russia to announce its technical team so that the design and right of way of the proposed pipeline would be discussed.

“The two pipelines would be laid with compressors.” On capacity and experience of the ETK firm nominated by Russia, he said that the Russian government had submitted details according to which ETK had built 4,000 kilometres gas pipeline.

According to the original design of the project, Russia was to provide 85% financing for the project. However, the Supreme Court had recently given a decision to recover the outstanding amount of the Gas Infrastructure Development Cess from different sectors. It also gave six-month deadline to start work on the NSGPP. In this situation, Pakistan wants to increase its shareholdings in the project.

At present, two LNG terminals are operational that were set up by Pakistan’s business tycoons during the PML-N tenure. These terminals are handling 1.2 bcfd LNG capacity.