Pakistan in talks with Russia for LNG imports

As Russia develops the Yamal LNG project facility -- Islamabad and Moscow are in talks to a multi-billion dollar government-to-government import deal. The Yamal LNG Project includes the development of the giant South Tambey (Tambeyskoye) gas field that is located near Sabetta in the Yamal peninsula in Russia. The Russian government has declared the project to be of national interest at a cost of around $27 billion.

This is a new addition to the energy cooperation between Pakistan and Russia as two countries are already working on different projects including the Pakistan Gas Stream, a gas pipeline from Kazakhstan and an offshore gas pipeline. Sources said the Pakistani government was interested to sign a government-to-government deal with Russia to import LNG to meet its growing gas demand.

They added that Russia was developing the Yamal Project, which would be one of the largest LNG facilities in the world. Russia is also meeting the demand of Europe by exporting gas through a pipeline despite the opposition of the US. The sources said Pakistan LNG Limited was in talks with Russian firms Gazprom and Novatek to import the gas. At present, Pakistan has a space on the second LNG terminal owned by Pakistan Gasport Consortium Limited (PGPC) to import the product despite a fresh deal of imports from Qatar. At present, Qatar controls the Pakistani market in terms of LNG import.

Earlier, Saudi Arabia had dominated the Pakistani oil market. However, Qatar had started supplying LNG to Pakistan. This affected the oil market on the supply of fuel to power plants as they had started using LNG to produce electricity. The sources said Pakistan was currently importing LNG from Qatar and wanted to apply this as a benchmark price for other countries including Russia. They said the benchmark price set by Pakistan might cause hurdles in implementing the LNG deal with Russia. Moreover, the prices of LNG had globally witnessed a sharp increase.

Secondly, the Russia is too far away and Pakistan might face higher freight charges in comparison with LNG cargoes coming from Qatar. However, Russia might have the option to follow LNG cargo swap with other companies operating close to Pakistan that could result in cutting the freight charges. Pakistan meets around 24% of its gas demand through LNG imports. Initially, the PML-N government had planned to utilise LNG in industrial, power and commercial sectors.