Pak-Russia to sign billion dollar energy deal

Russia has shown readiness to export gas by laying an offshore pipeline through Gwadar Port to Pakistan and India

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ISLAMABAD: Pakistan and Russia are all set to formally ink a billion dollar energy deal on Monday for the construction of an offshore gas pipeline and the supply of gas to Pakistan as Russia wants to export gas to South Asian countries.

At present, Russia controls and manages huge gas reserves in energy-rich Iran and Turkmenistan. Russia has also been a prominent gas exporter to the European Union (EU) countries and Turkey despite US sanctions as the European bloc continued to make imports to meet its energy needs. However, due to the Crimea stand-off, Moscow is, to some extent, under the pressure and fears that it may lose energy consumers in Europe. Considering Pakistan and India as alternate markets, Russia is now making efforts to capture these markets since Russia has shown readiness to export gas by laying an offshore pipeline through Gwadar Port to Pakistan and India.

Official sources at Petroleum Division on terms of anonymity informed that following a go ahead by the former federal cabinet under the chairmanship of former prime minister Shahid Khaqqan Abbasi to formally sign agreement with Russia for the supply of gas and construction of an offshore gas pipeline, Pakistan’s ambassador to Russia will sign a Memorandum of Understanding (MoU) with Moscow on Monday.

Sources said after the signing of MoU, Russia’s Public Joint Stock Company Gazprom will assess the viability of the project as Pakistan’s federal cabinet has also allowed the Gazprom to conduct a feasibility study at its own cost and risk. Russia has already shown willingness to finance the feasibility study of the project and nominated Gazprom to implement the project, said sources.

“However, after conducting the feasibility study, the final cost of the gas supply project will be assessed by Gazprom,” said sources.

Sources also said that Inter State Gas Systems (ISGS) – a state-owned company of Pakistan established to handle gas import projects has been nominated by Pakistan to execute the offshore pipeline project along with Russian Gazprom.

The sources added that after the signing of agreements between the two countries, Russia, which controls and manages huge gas reserves in energy-rich Iran, and Turkmenistan, will provide gas to Pakistan via Iran and Russian Gazprom will construct the gas pipeline inside Iran and Pakistan. They said though Iran has no objection with the Pak-Russia gas deal, however, Pakistan will have to revive Gwadar-Nawabshah gas pipeline project to get Russian gas via Iran and for ensuring energy security of the country.

It was also learnt from sources that after the construction of the gas pipeline, Russia will initially supply 500 million to 1.5 billion cubic feet per day to Pakistan while in future, Russia will also be able to supply gas to India via Pakistan through land or sea routes. They added that Russia will also sell Turkmenistan’s and Iran’s gas to Pakistan and India via Iran at cheap rates in comparison to the price of Liquefied Natural Gas (LNG).

Former prime minister Nawaz Sharif during a Cabinet Committee on Energy held on June 6, 2017, had ordered to stop the $2 billion Gwadar-Nawabshah gas pipeline project although approximately Rs3 billion had already been spent on the project at the time. However, Chief of the Army Staff General Qamar Bajwa during the meeting of the National Security Committee raised the matter and, both civil and army leadership unanimously decided to complete the construction of gas pipeline project with the cooperation of Russia.

Official sources at Petroleum Division further informed that Petroleum Division is mulling over to revive the 700-kilometre long Gwadar-Nawabshah gas pipeline project especially due to recent developments achieved in enhancing relations with Russia in the energy sector. They said after signing the defence deal, proposed energy cooperation between the two countries will usher a new era of cooperation and confidence between Russia and Pakistan.

Pakistan and Russia had already reached an understanding on signing the offshore gas pipeline deal during former prime minister Shahid Khaqan Abbasi’s visit to Sochi, Russia. And, at present, the two sides are poised to ink a memorandum of understanding (MoU) for the offshore pipeline, said sources.

It is worth mentioning that Pakistan Today had already reported on December 21, 2017, about the expected major breakthrough towards regional connectivity and energy cooperation between Pakistan and Russia.

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