Investment in Gwadar: China to help build $3b LNG pipeline and terminal
“The agreement was signed during Prime Minister Nawaz Sharif’s visit to China. It is a state-to-state deal and no bidding will be held for the award of contract,” an official told The Express Tribune.
According to initial estimates, the project is expected to cost $3 billion – $1 billion will be needed to lay the pipeline from Gwadar and over $2 billion will be required to construct the terminal with liquefied natural gas (LNG) handling and re-gasification facilities and to develop large storages.
China will meet 85% of the financing needs for constructing the LNG pipeline from Gwadar Port to Nawabshah.
The Ministry of Petroleum and Natural Resources is seeking the support of economic decision-makers for relaxing the Public Procurement Regulatory Authority (PPRA) rules.
“The ministry will approach the Economic Coordination Committee (ECC) to win its approval for easing PPRA rules,” the official said. “This will clear the way for direct award of a lucrative contract to a Chinese state-owned company.”
This will be the second LNG terminal in the country as a fast-track terminal is already being built by Elengy Terminal Pakistan Limited (ETPL) at the Port Qasim, which is likely to be completed in February next year.
The LNG pipeline will be extended from Gwadar to Iran for gas import when sanctions on Tehran are lifted. Its capacity will be one billion cubic feet per day.
The pipeline will have the same specifications that were proposed for the Iran-Pakistan gas pipeline including a diameter of 42 inches.
According to officials, since Pakistan has not been able to lay a 781km pipeline from the Iranian border to Nawabshah because of its failure to tap foreign finances, it has decided to build the pipeline from Gwadar to Nawabshah in partnership with China.
This will transport at least 500 million cubic feet of gas per day (mmcfd) after re-gasification of imported LNG.
Hopes were high as the US and Iran were engaged in crucial negotiations to settle the dispute over Tehran’s nuclear programme with a strong possibility that they would reach a compromise, officials say.
The economic decision-makers have already made their mind that before the curbs are removed they will not push ahead with the gas pipeline project with Iran to avoid its repercussions for Pakistani companies.
The terminal planned at the Gwadar Port will have the capacity to handle 690 mmcfd of LNG. Apart from this, large storages will be constructed at the port from where the LNG, after re-gasification, will be transported to Nawabshah, where it will be injected into the national gas network.
Published in The Express Tribune, November 25th, 2014.
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COMMENTS (16)
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Gawadar is a port that is connected to nothing and goes nowhere. The only reason the Chinese are interested in it is to base their submarines and navy there. They are not going to invest $3B in any LNG project that won't benefit China directly. They will invest this sum only if they are sure they can reap $6B in three years. The Chinese don't throw around free money like the Americans.
@Gp65: Hahahah, hahahah... youre a funny guy...
@Hedgefunder: Yep, youre exactly like most British people I have met... Upon my trip back to the US from UK, I was hoping someone would ask me if I have something to declare, because my answer would have been: "Yeah... dont ever go to the UK!'
Nawaz Bandits! can make money only in Qatar, Turkey, China, Bakhshish Bakhshish Bakhshish! it's time Pakistanis compatriots could take power in hands asap even using force by all means, Go Zardari Go, Go Nawaz Go, just go away!
@Hedgefunder: I believe Indians should only be concerned about their own country as its not UK itself however, it would have been acceptable if we both nations had good relations and this was said for the betterment and not as a taunt! Moreover, you know you'll always be a migrant in UK no matter what, hah only if India was as good as UK itself.
@Gp65:
Thank you, for the response on my behalf. I am of Indian origin, not by birth and subject of UK. The reason i follow the events in this neighborhood, is quite simple, as my tax money is used to provide aid to Pakistan by my Government, additionally i have business interests in India, hence the interest in the region. I have just watched Modiji's first speech in Kathmandu, and its high time that people realize that this is one great statesmen of present generation, which sadly Pakistan not only lacks but have never ever had one !
I may be wrong but I feel that Pakistan probably missed the chance by not completing Gawdar Port and should have done by almost a decade back. Gawdar is supposed to be conduit of crude energy for China, in disregard for south and east asian countries security wrt China. Gawdar port is coming at the time when world is trying to move away from crude or reducing its consumption and moving towards cleaner energy. Since US is going to become an oil exporter within half a decade, Gawdar is then suppose to be used a Naval base by both China and Pakistan. I think that Pakistan could have made more money by taking the security of oil shipment from Gulf States, without involving any second party.
As far as Modi is concern well for me the best decision he has taken that he eased the visa for migration of non-muslims from Pakistan.
Lets add up the value of all the unfullfilled MoUs, Commitments, Agreements etc that the Pak Governments have signed over the last 7 years shall we....The total adds up to well over a $100 billion, 150+ years of cheap energy from Thar, Millions of tons of gold and copper from Riko Diq, Refineries along the Makran Coast, operational port at Gwadar, huge desalination plants. The list goes on and on and on and on and on......
@just_someone: "@Hedgefunder: You must be Indian… What have you gotten from Modi yet?"
I am not @hedgefunder but I will tell you what Indians have got from Modi: - reduction in inflation! including food inflation despite inadequate rainfall this year - a more accountable and responsive bureacracy - visible improvement in transparency of government decisions - particularly approvals - a change in international sentiment of India as an onvestment destination - inclusion of 80 million Indians in the nation's financial ecosystem through Jan Dhan Yojana - a heightened sense of awareness nationally about cleanliness
@Hedgefunder: The pipeline from Gawadar will generate economic activity as LNG will be imported via this port. Get your head out of your and start using your brain. Long live Pakistan.
@Hedgefunder: Yes, we did, and we will get more from this investment as well. Strategic location of Gwadar close to the world's busiest energy corridor, access to deep sea ports and development of local communities to name a few. Jealous much? You should be.
@Hedgefunder: You must be Indian... What have you gotten from Modi yet? A Yoga Minister???
Please worry about your own country and, after your country ceases to have rampant poverty, you can come give us advice here :) Best wishes, All Pakistanis
Gwadar Port was opened for operation in March 2007 by then Military Dictator and President of Pakistan, General Pervez Musharraf along with the Minister of Communications of the Peoples Republic Of China, Li Shenglin.
In the more than 7 years that has passed since opening, Gwadar Port has yet to handle a kilogram of purely commercial cargo with all the sporadic cargo shipments that pass through the port being cargo imported by the Government of Pakistan.
Pakistan is advised to first bring Gwadar Port into commercial operation before touting other grandiose plans like USD 3 Billion LNG regasification plants.
@hedgefunder, why does it matter if it is a success or complete failure, reality or a figment of sino-pak imagination?
How dare the Pakistani regime lie again and again to Iran! Enough time has lapsed for the Pakistanis to have worked out what is good for their population! The sad thing is the present government is a lame duck. They lack credibility. The Shariff brothers have no idea about foreign policy. Unless they get a nod from Washington or Riyadh they won't do anything. Pakistan needs the likes of 'fresh and new minds' like Imran Khan or Dr Tahir Qadri. The Pakistanis cannot fool the great Iranian nation. It's their way to avoid the contractual obligations imposed in terms of penalties for their breaches.