Deepening partnership: Pakistan looks to Russia for satiating energy demand

Published: June 29, 2015
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They are likely to sign $2b deal for laying an LNG pipeline from Karachi to Lahore.

They are likely to sign $2b deal for laying an LNG pipeline from Karachi to Lahore.

ISLAMABAD: 

In an effort to meet the burgeoning demand for electricity and gas, the government has found a new partner – the energy-rich Russia that has vast reserves of oil and natural gas.

In recent years, energy supply has become a major challenge for Pakistan where hours-long outages and gas rationing have been part of the daily life of ordinary people and industrial and commercial concerns.

Though some initiatives have been taken by the present and past governments to clinch major energy deals like the Iran-Pakistan (IP) and Tapi gas pipelines and Central Asia-South Asia 1,000-megawatt power import programme, implementation work on these has not yet begun.

The energy projects agreed as part of the China-Pakistan Economic Corridor (CPEC), however, have become encouraging and may be executed on a fast track.

Read: Pak-Russia ties: Big room for enhancing trade, says envoy

Now that Prime Minister Nawaz Sharif is going to Moscow on July 9, Pakistan is likely to sign a $2-billion energy deal with Russia for laying a liquefied natural gas (LNG) pipeline from Karachi to Lahore, officials say. However, the partnership may spark angry reaction from India.

“We are trying to sign an LNG pipeline accord with Russia in a government-to-government arrangement during the visit of prime minister to Moscow,” Petroleum Minister Shahid Khaqan Abbasi said while talking to The Express Tribune.

Sharif would be in the Russian capital to attend a summit of the Shanghai Cooperation Organisation (SCO) and in talks on the sidelines, the two countries are expected to ink the $2 billion accord.

Indian premier Narendra Modi is also likely to attend the SCO gathering and he may express concern over the Russian investment in Pakistan. He has already reacted against the CPEC agreement.

During the SCO meeting, Pakistan and India are expected to get permanent membership of the regional forum as Russia and China are pleading the cases of the two South Asian states. At present, Pakistan and India have observer status in the SCO.

In addition to financing the pipeline, Russia has also agreed to export LNG in a bid to help ease energy shortages in Pakistan. This issue will also come up for discussion during the talks.

The two sides have already signed an initial deal in the form of a protocol and finalised an agreement during earlier talks in Moscow. Under the partnership, Russia will provide $2 billion to lay a 1,100km pipeline from Karachi to Lahore for supplying LNG that will be imported from Qatar and other countries. Pakistan will award the contract to Russia without inviting bids.

Read: Defence union: Pakistan, Russia to conduct joint military drills

In the 1970s, Russia had helped to set up a steel mill in Karachi and also supported Oil and Gas Development Company, 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 shelved IP gas pipeline project including the Gwadar pipeline and the south pipeline from Karachi to Lahore.

The government has signed a deal with China for the award of the $3-billion Gwadar LNG pipeline and terminal project.

Earlier, Pakistan had invited China and Russia to lay the IP gas pipeline but both hesitated because of western sanctions on Iran.

According to officials, a commercial deal will also be inked with a Russian firm following the pact between the two governments.

“The Russian side is very positive about helping Pakistan in tackling the energy crisis,” an official said. “It will start LNG exports in 2016.”

An LNG terminal has started functioning in Karachi with the first LNG shipment brought by the private sector at the end of March.

At present, the pipeline network has the capacity to transport 320 million cubic feet of LNG per day and the government is striving to build an additional pipeline.

the writer is a staff correspondent

Published in The Express Tribune, June 29th,  2015.

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Reader Comments (17)

  • Prada
    Jun 29, 2015 - 8:09AM

    Why Russia? Any nation will meet the needs of Pakistan as long as it is prepared to pay. Most of the time, Pakistan has no intention of paying and instead expects aid. Maybe with the Russians, Pakistan may promise to target the Chechen rebels in NW. Recommend

  • raghu
    Jun 29, 2015 - 9:03AM

    Probably India is opposing because while Pak tries to build business relations with other nations , it doesnt allow gas to exported to India via pipeline that would have helped Pak too. Probably such a blackmail is on India’s mind. I think its good oppurtunity for Russia.Recommend

  • Shaikh
    Jun 29, 2015 - 9:15AM

    Well done, PMLN. Let’s hope the deal goes through.Recommend

  • Dishum
    Jun 29, 2015 - 9:19AM

    Great. Pious nation of empty pipelines.Recommend

  • NITS
    Jun 29, 2015 - 11:19AM

    Pipelines alright. But Russia takes upfront cash. So, let’s toss who will pay to Russia- IMF, World bank or aliens? :DRecommend

  • SyedPk
    Jun 29, 2015 - 11:29AM

    @raghav,
    India backed out of the IPI pipeline itself on the pressure of the USA, thus throwing the whole pipeline plan into dissarray, because India was to be the main customer and beneficiary of the project. India chose to go with Civillian Nuclear technology given as a compensation from USA. A pipeline terminating Pakistan from Iran or Turkeministan would cost Pakistan alot compared to the pipeline terminating in India passing through Pakistan.Recommend

  • PipeDream
    Jun 29, 2015 - 11:30AM

    Yet another pipeline??
    Pipelines are not a good idea in a place where terrorists thrive.Recommend

  • Ahmed
    Jun 29, 2015 - 11:57AM

    Why do we need a dedicated pipeline for LNG. Why can’t the current transmission system be used. Another project for getting kickbacks. Another excuse for the persistent energy crisis.Recommend

  • optimistic
    Jun 29, 2015 - 12:17PM

    Great! Russia is tilting towards Pakistan in the South Asian region. This is another important development after the recent Pak army chief visit and other visits at goverment level. Pakistan has also realised its about time to let go of the US. Russia, China and Pakistan would be the real game changers in days to come considering the ukraine situationRecommend

  • Joe
    Jun 29, 2015 - 12:20PM

    @Prada right … Nobody is going to pay for the freebies.Recommend

  • khan
    Jun 29, 2015 - 2:59PM

    @raghu:
    what????
    the statement shows how bias Indians are.
    it was india who backed out of iran deal, destroying the whole project on whim of USA.
    while work of TPI pipeline is going onRecommend

  • Jun 29, 2015 - 3:15PM

    Roshan Pakistan… PML N zindabad Recommend

  • Kamal
    Jun 29, 2015 - 4:53PM

    Pakistan is blessed by all natural resources. We should use solar energy, wind turbines, Water turbines, Thar Coal reserves to fix the energy crisis. Pakistan is a place where we have a lot of solar potential. With very little rain and a lot of sunshine, it makes the energy production feasible and more economical. Stop begging other countries now and try to utilise our own reserves for the enhancement of its industry and economy. Solution lies within Pakistan.

    The question that comes to the mind of an average citizen is, after two years of promises, why has the government been unable to guarantee electricity, and what needs to be done? We Need an intelligent PM.Recommend

  • cautious
    Jun 29, 2015 - 6:42PM

    Anyone stop to notice that you don’t have the money/credit to buy a continuous supply of LNG? Maybe you should worry about pipelines after you figure out how to buy the LNG?Recommend

  • G. Din
    Jun 30, 2015 - 12:11AM

    “… the partnership may spark angry reaction from India.”
    There is no reason why India would object to this pipeline. India objected to CPEC because it passes through its territory it considers as occupied currently by Pakistan. India will never dictate to any nation nor would it expect that other nations would subordinate their legitimate interests to India’s any more than it is prepared to do so with respect to other nations. If you can pay for it, by all means go ahead!Recommend

  • Fatima
    Jun 30, 2015 - 8:40AM

    I don’t think that PML – N can really do it, because it is a partner of Saudi and Saudi is a son of US…. if Pak army push PML – N then there will be possibility of it…Recommend

  • Ayaz MIRZA
    Jun 30, 2015 - 2:48PM

    @Ahmed:
    They (PMLN) don’t mean anything ,just keep talking .Six month later it will be Indonesia then Australia and so on. Recommend

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