Ties triumph: Pakistan, Russia ink $1.7b energy deal

Published: December 23, 2014
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The energy agreement was signed during the visit of the Russian defence minister. PHOTO: PID

The energy agreement was signed during the visit of the Russian defence minister. PHOTO: PID

ISLAMABAD: 

Pakistan and Russia signed a most sought-after energy deal of $1.7 billion for laying a liquefied natural gas (LNG) pipeline from Karachi to Lahore. The supply of LNG is expected before March next year.

It is for the first time Islamabad and Moscow have signed an energy pact decades after their defence deal.

The energy agreement was signed during the visit of the Russian defence minister. Moreover, Islamabad and Moscow also signed a defence and military cooperation deal, a move seen by economic experts as ushering in a gradual improvement in ties between the two countries.

Before Gen Ziaul Haq’s military  regime, Russia had helped Pakistan set up the Karachi Steel Mills and also supported the Oil and Gas Development Company Limited, which is still using old Russian machinery in exploring oil and gas.

Pakistan is currently working on two LNG pipelines as an alternative to the apparently doomed Iran-Pakistan (IP) gas pipeline project, which included LNG Gwadar pipeline and south pipeline from Karachi to Lahore.

The government has signed a deal with China to award $3 billion Gwader LNG pipeline and terminal project.

Earlier, Pakistan had offered China and Russia to lay IP gas pipeline but both the countries had backed out due to sanctions imposed against Iran.

“However, the government has offered Moscow to sign a deal on government to government basis of $1.7 billion for laying LNG pipeline from Karachi to Lahore during the recent meeting of Pak-Russia Joint Ministerial Commission following a defence deal between the two countries,” sources said.

There was a good development between Islamabad and Moscow in the JC meeting to enhance bilateral energy cooperation, the sources maintained.

Officials pointed out that the pipeline would be used to transport imported LNG from Karachi to Punjab, adding that LNG terminal was in progress and first supply of LNG was expected before March next year.

At present, existing pipeline network has capacity of transporting 320 million cubic feet of gas per day (mmcfd) LNG and therefore the government was going to set up additional LNG pipeline.

The regulator Oil and Gas Regulatory Authority (Ogra) has already allowed gas utilities Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company (SSGC) to generate funds from gas consumers to set up LNG pipeline.

SNGPL has planned to invest $750 million and SSGC $300 million to set up LNG pipeline. This pipeline was also likely to link with Gwadar LNG pipeline in future to pump gas from Iran and also LNG supply through a terminal to be set up at Gwadar.

Officials said that Pakistan had almost done a deal with China to lay Gwadar LNG pipeline which would be connected to Iran and south LNG pipeline from Karachi to Lahore had been offered to Russia.

The government of Pakistan was keen to award contract of south LNG pipeline to Russia on government to government basis which would create competition with China.

“The presence of two countries [Russia and China] in energy sector would open new avenues for attracting more investment,” sources maintained.

Published in The Express Tribune, December 23rd, 2014.

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Reader Comments (26)

  • Blithe
    Dec 23, 2014 - 3:12AM

    Well dond PML N!

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  • Saad
    Dec 23, 2014 - 3:19AM

    A good decision. One of the few things I agree with Nawaz on.

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  • Maria
    Dec 23, 2014 - 3:30AM

    Great news to see that progress is being made to deal with the energy crisis in Pakistan. China and Russia both have experience in the field. Shows that an elected government can get done in hardly 2 years what a dictatorship couldn’t do in 10 years. In Musharraf’s decade long rule not 1 MW of energy was added to the national grid but we can see how many plans have started in the last year that hopefully will be in effect soon enough to benefit the public.

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  • unbelievable
    Dec 23, 2014 - 3:31AM

    More chest thumping? It’s a pipeline not an “energy deal” and BTW – you don’t have any LNG.

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  • me
    Dec 23, 2014 - 3:39AM

    Great news! Should make the headlines of our news buletons! Long live Russia-Pakistan friendship. Long live Peace!

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  • truthbetold
    Dec 23, 2014 - 5:27AM

    The most important point is the Russians would want hard cash. Where is the $1.7B is going to come from? Pakistan had signed a lot of such agreements in the past with many countries, but they are fell by the wayside when the time came to “show me the money” part.

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  • GKA
    Dec 23, 2014 - 7:21AM

    Please check your sources. There is no pipeline in the world which transports LNG for such a distance. LNG exists at minus 160 degrees C. Not possible to have such a pipeline.

    If it is regassified LNG then it is possible possible. But then it is an ordinary gas pipeline. And US$ 1.7 bln is way too high cost for such a distance – worse than a sell out

    Either way something wrong with this story.

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  • Vivek Nigam
    Dec 23, 2014 - 9:20AM

    Lack of protocol known person, The leaders are sitting along with each other’s national flag. poor bureaucracy. lol

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  • Amer
    Dec 23, 2014 - 9:26AM

    WRONG WRONG WRONG!!
    There is no “LNG Pipeline” in the WORLD ! Where are you getting these stories from ? or is Mian Sahab developing new technology and terms overnight. This can be just ordinary gas but then this would be the costliest pipeline in the world for gas.
    P.S: Why is the Russian defense minister signing ENERGY agreements ? Is that how this deal works?

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  • Wali
    Dec 23, 2014 - 9:34AM

    Absolute disinformation. LNG is not transported in a pipeline – but rather tankers. Serious misinformation.
    We see agreements on energy and infrastructure being signed left, right and center with absolutely no meaning – mostly just MOUs – with no requirement or undertaking legally on either party. Domestically, in Pakistan they are being sold as an achievement and a pat on the back.

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  • Zubair
    Dec 23, 2014 - 9:46AM

    Again Punjab…He is the prime minister of Punjab, Not Pakistan….The PMLN is bent upon stregnthening inter provincial hatred.

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  • Energy Guru
    Dec 23, 2014 - 10:01AM

    As already mentioned in an above comment, there is no such thing as an “LNG” pipeline. LNG is essentially a ‘natural gas’, which is called Sui Gas in Pakistan. For shipping this gas is ‘liquified’ and hence called LNG. This LNG is then re-gassified to bring it back to the natural ‘gaseous’ state once it arrives at the destination port. So in effect, that touted LNG pipeline shall essentially be a ‘natural gas pipeline’. Additional pipes shall inevitably be required to transport the imported gas, i.e. LNG, from Karachi to the upcountry as the existing Sui pipelines may not be able to do the same because of capacity and reliability constraints.

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  • Milind
    Dec 23, 2014 - 10:17AM

    And U.S. is going to let this materialize!!!

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  • Shahid
    Dec 23, 2014 - 10:32AM

    Russia is pursuing for its lost status as the great power by confronting the US in the Asia Pacific and changing it policy towards the pivot east. Russian intentions of financial and technical assistance for electricity and gas supply projects as well as expansion of steel mill in Pakistan is in benefit of both states. Defense collaboration needs more boost but with the passage of improving ties, both states can prove to be friendlier in international arena.

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  • Virkaul
    Dec 23, 2014 - 10:32AM

    @me:
    Isn’t it a U turn in policy? Russia’s red army stationed in Afghanistan was in its attempt to reach “Warm Waters” was thought to have invaded Pakistan in 1979. The narrative if Afghan jihad was built on this premise. Was the establishment lying to its people then or is it lying now?

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  • Careless Whispers
    Dec 23, 2014 - 11:13AM

    @Vivek Nigam:
    Lack of knowledge from ur side, both r Pak flags.. Arm chair analyst

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  • Ali-Dubai
    Dec 23, 2014 - 11:18AM

    @Virkaul:
    In 1979 it was revenge taken from them for supporting India in 1971 for the creation of BanglaDesh.

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  • Saqib
    Dec 23, 2014 - 11:56AM

    Defence Minster signing energy deal?

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  • Shahana
    Dec 23, 2014 - 12:38PM

    This is really a landmark for both Pakistan and Russia as it’s a time to evade the old misunderstanding and time to change perceptions towards each other. Geostrategically, Russia is kind of much nearer to Pakistan but because of Cold War attributes, its remain far away. From the near past, Russia realizes the importance of Pakistan and that’s why headed towards building an atmosphere of cooperation. The Pak-Russia growing join ventures also bring certain strategic implications for South Asia. India relatively feels much uncomfortable on this as it openly oppose Russia’s growing ties with Pakistan.

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  • Reddy
    Dec 23, 2014 - 2:22PM

    LNG(liquified natural gas), you ship it,you don’t put it in a pipe …either way there is something grossly wrong with this article

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  • Mujadid
    Dec 23, 2014 - 5:16PM

    It is possible that in the new strategic circumstances, and in exchange for appropriate safeguards, Russia, like China, may consider the sale of nuclear power plants to Pakistan, especially if India acquires its new plants from the US. Pakistan needs to identify realistic goals for its new relationship with Russia, evolve sustainable ways to minimize its financial vulnerability (including greater financial integration with China) and deploy adroit diplomacy to capitalize on the emerging global and regional strategic realities.

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  • truthplease
    Dec 23, 2014 - 5:38PM

    @Shahana

    Believe me! Relations between India and Russia is so deep rooted, and involvement of Pakistan-Russia will hardly make an effect. Currently, US may have growing relations with India, and Pakistan with Russia. But both the latter will hardly boycott or give up each other.

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  • Bahaha
    Dec 23, 2014 - 8:08PM

    @unbelievable:
    Correct we dont have any Lng except in cylinders made in qatar

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  • Sahay
    Dec 23, 2014 - 8:14PM

    Russia Pakistan flourishing relation could be a gift in disguise for India.

    The trust deficit between India and Pakistan is so high that a direct Indo-Pak dialogue hardly yields anything substantial. In this scenario if Pakistan’s relations improves with a country which is a strong ally of India, then New Delhi should support this move as this channel could later be exploited to build trust with its neighbour.

    Hope Pakistan’s ties with all these central asia States and with Russia bring prosperity to its people and their Govt has something else in their agenda than just to target India.

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  • Oats
    Dec 23, 2014 - 11:47PM

    @truthbetold: The Russians are not stupid. I am sure that they also see benefit in this deal but the bottom line is that Nawaz Sharif has scored a success in diversifying the country’s reliance on only China for energy needs.

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  • TiffinBox
    Dec 24, 2014 - 1:33AM

    @Sahay, you Sire are a Genius.

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