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March 1, 2018

Pakistan works out another gasline project to avoid $1.2b Iranian penalty


March 1, 2018

ISLAMABAD: The government headed by Prime Minister Shahid Khaqan Abbasi has worked out another alternate project -- laying down of a gas pipeline from Somiani (Balochistan) to Nawabshah that is to be pitched before Iran to avoid wrath of Iran which has already threatened to move arbitration court seeking $1.2b penalty for failure by Pakistan in implementing IP gas line project, a senior official of Petroleum Division told The News.

“The government has already shelved 700km Gwadar-Nawabshah LNG Pipeline (GNGP) which was earlier initiated by the Nawaz government as replacement project of IP gas line. Iran was earlier persuaded on the argument that the GNGP project was worked out on account of US sanctions against Iran and after materialising the Gwadar-Nawabshah LNG Pipeline project, the pipeline will be extended to Iranian border and the project will be called as IP gas line project, but unfortunately, Pakistan has abandoned the project on the pressure from a leading Middle East country.”

Now Iran has conveyed to Pakistan that it is going to arbitration court for imposition of 1.2 billion dollars penalty on Pakistan as per gas sales purchase agreement (GSPA) signed in 2009 and the authorities in Islamabad have worked out another project namely Somiani-Nawabshah gas pipeline to pacify authorities in Iran.

The official said that Pakistan Naval Force (Pak Bahria) is going to build RLNG terminal at Somiani with capacity to re-gasify 500-600 mmcfd LNG.

Earlier Pak Bahria was perturbed on how to evacuate the LNG from Somiani once the terminal is built. Now the government has asked Pak Bahria to go for the project and the LNG will be transported through the pipeline which Inter-State Gas System (ISGS) will lay down. Under the project, the length of the pipeline will be of 300-350 kilometer from Somiani to Nawabshah and at Somiani an LNG terminal will be built. The cost of the project is estimated to be lowered by 50 percent than the GNGP project. Iran will be told by the authorities concerned that once the newly worked out project comes on stream and if the sanctions against Iran are eased out by that time, the pipeline of 400 kilometers will also be laid down from Somiani to Iranian border and the whole project will be treated as IP gas line.

However, let’s see if the government succeeds to persuade Iran with the initiation of another pipeline project to keep the huge penalty of $1.2 billion away, the official said. To a question the official said that Pak Bahria has already completed the feasibility of LNG project and FEED (front end engineering design) as well. The terminal will be completed with the estimated cost of $150 million and the 350km pipeline at the cost of $300 million. If the project is approved today it will take time 2-3 years to get completed.

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