Work on Gwadar-Nawabshah pipeline to be started this month: officials

ISLAMABAD: China Pipeline Petroleum Bureau (CPPB) is most likely to initiate sometime by end of current month construction work on the mega project of $1.325 billion 700km LNG pipeline to be laid down from Gwadar to Nawabshah.

The pipeline will be having the capacity to transport 1.952 bcfd out of which Gwadar is to be provided 100mmcfd gas in the first phase and when pipeline starts in taking Iranian gas, the port city will also be provided gas of 150mmcfd more. This is how in toto, Gwadar will be injected 250mmcfd gas from the pipeline, a senior official of the ministry told The News.

Ministry of Petroleum and Natural Resources to this effect has put up the summary to ECC seeking the permission to sign the formal agreement with the Chinese company. Incase ECC approves the summary, formal agreement will be inked in the same week and the ground breaking of the project will kick off by end of November. The project will be completed and made operational by June 2018. Mobine Saulat, Managing Director of Inter-State Gas System confirmed the likely positive development. The pipeline will be having the capacity to transport the gas of almost 2Bcfd (billion cubic feet gas per day) and to this effect four compressors would be installed in the pipeline as against the earlier plan of three compressors. The pipeline will carry 1.2bcfd gas from the two RLNG terminals to be operational by the time when the pipeline will be commissioned in June 2018 and 750mmcfd gas from Iran when the pipeline will be extended back by 81 kilometers to Iranian border.

Both Pakistan and china in May 2016, initialed an agreement to build 700km gas pipeline to be laid down from Gwadar to Nawabshah at the cost of $1.35 billion after Price Negotiation Committee (PNC) finalised the cost of the project. And to this effect, Inter-State Gas System (ISGS) on behalf of Pakistan and China National Petroleum Corporation (CNPC) on behalf of China on May 11, 2016 initialised the agreement.

The project will be constructed with 85 percent financing from Chinese Company and 15 percent from government of Pakistan, and the price at which the gas line will be laid down is much below the estimated cost, top sources of the Ministry of Petroleum and Natural Resources told The News. The price of the pipeline had been negotiated under government to government mode at very competitive price of $1.325 billion which is cheaper than the project of augmentation of gas network completed by both the gas companies — Sui Northern and Sui Southern.

Executive Committee of National Economic Council (ECNEC) has already accorded the approval to the LNG pipeline. The project will be completed under mode EPC-F (engineering, procurement, construction and financing). 

According to the top officials, earlier Chinese side had come up with the offer to build the pipeline with diameter of 42 inches at the cost of $2 billion, but after hectic meetings of Price Negotiating Committee (PNC) in a row, the price of the pipeline had been finalised at close to $1.325 billion which is too much below the expectations. Sources said under the agreement basically the pipeline of 700km will be built and another 12km portion of pipeline will also be constructed from RLNG terminal to main pipeline and that particular portion will be part of LNG terminal. Once the pipeline is completed, Pakistan will extend the same pipeline with four compressor stations by 81km backward from Gwadar to Iranian border as part of IP gas line.