$2 billion North-South RLNG pipeline: Pakistan, Russia finalise BOOT agreement

ISLAMABAD: Pakistan and Russia have finalised the BOOT (built, own, operate and transfer) agreement for laying down $2 billion North-South RLNG pipeline from Nawabshah to Lahore. The draft agreement has been handed over to respective legal teams for converting it into legal language.

A pipeline of 300 kilometers will also be laid down from Karachi to Nawabshah if the need be. Under the BOOT deal, both sides have finalised the payment and invoicing mechanism and reached agreement on operational and termination mechanism.

During the four-day talks, Pakistan was represented by the Inter-State Gas System (ISGS) and Russia by the RT Global.

The talks got underway in Islamabad from October 15 and ended on October 18.

According to the Inter-State Gas System MD Mobin Saulat, the BOOT agreement had been finalised and its draft handed over to the legal team.

The Russian company will hand the project over to Pakistan after 25 years, as it will be executed under the BOOT arrangement.

Asked about the project cost and its transportation fee, Saulat said both side had just completed and finalised the agreement.

He said for Russia will send its commercial team to hold talks with the Price Negotiating Committee (PNC) for the project cost and transportation fee which was already in place.

Saulat said Pakistan direly needed this project to get RLNG that will be injected through private to private model LNG terminals. Three terminals are being planned to be set up in Port Qasim, he said.

Pakistan’s two LNG terminals are currently equipped with the off-take guarantee of 1.2 bcfd re-gasified LNG from the government of Pakistan. However, three private-to-private model based LNG terminals are also in pipeline, which may be operational by 2020.

And on top of that, (Turkmenistan-Afghanistan-Pakistan –India) TAPI is also re-scheduled to be operational by 2020.

Under this project, Pakistan will be importing 1.3 bcfd gas. The main problem will be how to evacuate the gas to various parts of the country and for this purpose both Pakistan and Russia will give the final shape to the BOOT agreement for laying down the much-needed N-S pipeline. The pipeline with diameter of 42 inch will have the capacity to evacuate 1.2 bcfd gas. Asked if the RT Global had come up with a sanctions-free structure during the talks which was inevitable to ensure a smooth sailing of the project, Saulat said the Russians did not bring a sanctions-free structure; however, the had assured that they will send its plan to this effect in two weeks and this would be taken up ministry to ministry level.

Both sides have done maximum work in the last two years towards the agreement but the main stumbling block in the project’s execution is the US sanctions on the Russian company.

ROSTEC, the mother company of the RT Global, is facing sanctions on account of Ukraine issue.

During the parleys starting from today (Monday) the RT Global will also come up with a sanctions-free structure to get the gas pipeline deal done.

Saulat said the Ministry of Defense had been asked to provide the RoW (right of way) for the pipeline project and expressed the hope that the NOC will soon be in possession.