North-South gas pipeline: Russia to provide section-free structure to Pakistan

ISLAMABAD: In a major development, Russia has extended commitment to Pakistan that it will provide by October 15 the sanction-free structure for laying down North-South gas pipeline worth $2 billion.

Earlier, Secretary Petroleum wrote a letter to Russian Energy Ministry asking for the sanction-free structure as the project of paramount importance has already delayed and further delay is no more required.

Additional Secretary and Spokesman for Petroleum Division Sher Afgan said, “Yes, secretary petroleum wrote a letter to energy ministry in Moscow and in return Russia has given the commitment mentioning it will provide the sanction-free structure to Pakistan’s Inter State Gas System (ISGS) for initiating the physical work on the much delayed project.”

Pakistan has been asking Russia since long for sanction-free structure and pleading not to make ROSTEC, the mother company of the RT Global, the part of the project as it is facing sanctions.

Minster For Energy Omar Ayub Khan and Adviser to Prime Minister on Petroleum Babar Nadeem may visit Russia from October 2-5 primarily for road shows of blocs in Pakistan for exploration and production activities as government wants to hold auctioning for 10 blocs in December this year.

Earlier the delegation headed by Babar Nadeem visited US and Canada where they held road shows seeking interest from E&P companies for auction of blocs to be held in December in Pakistan. The Pakistan’s official delegation in Calgary, Canada got tremendous response and it is hoped that many E&P companies from Canada will participate in the bidding for auction of 10 blocs.

During the road shows in Russia, both the personalities will finalise the North-South gas pipeline line with Russian authorities too.

According to another official privy to the development, after third party access rules, the private sector is allowed to use the existing RLNG-1 and RLNG-2 pipeline for transportation of its gas to its own clients in the country, but the private sector may not get the capacity in pipeline all the time as the existing lines are used most of the time to transport the RLNG which the government imports and for which it has given the off-take guarantee of 1.2 bcfd RLNG from two existing LNG terminals.

However, there are certain periods when the capacity in the existing pipeline will be available and private sector can use it for transportation of the gas. “More five private to private basis LNG terminals are most likely to come on stream in next 2 years and we have to build another LNG pipeline from Karachi to Lahore for creating the maximum capacity for private sector to transport their imported product and to this effect North-South pipeline requires its completion in next two years.”

The existing gas infrastructure of Pakistan lacks capacity to transport additional large volume of gas supplies from Southern to Northern regions of the country. Therefore, keeping in view the expected additional gas supplies in near future, Ministry of Petroleum and Natural Resources has planned to undertake the laying of gas pipeline from Karachi to Lahore under the title “North-South Gas Pipeline Project”.

The ECC in its meeting held on January 10, 2015 approved the North-South Gas Pipeline Project (Project) under Government-to-Government arrangement. So far both sides have finalised the project that is to be implemented under BOOT mode and to this effect both sides have finalised the payment and invoicing mechanism and reached agreement on operational and termination mechanism. Russia will hand the project over to Pakistan after 25 years.

The proposed N-S pipeline will be laid down with diameter of 42 inch and will have the capacity to transport 1.2 bcfd gas.