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January 22, 2020

New structure provided for N-S Gas Pipeline: Pakistan to carry out detailed due diligence of Russian companies


January 22, 2020

ISLAMABAD: Pakistan has told Russia that it will carry out detailed due diligence of the companies included in the new structure that Moscow has provided for the North-South Gas Pipeline. Russia has responded that the companies included in the new structure are the last ones on behalf of Moscow and it will not be able to provide more structure if the newly-provided structure is not cleared, a senior official who was part of the 7th JCC meeting held here on Tuesday between the two countries told The News.

Russia's delegation, headed by Deputy Energy Minister Anatoli Tikhinov, participated in the JCC meeting while Secretary Petroleum headed Pakistan’s delegation in the meeting. In Pakistan’s side, representatives from the Foreign Office, Law Division, Finance, Petroleum division and Inter-State Gas System (ISGS) also gave their inputs in the meeting.

Pakistan earlier wrote many letters to the Russian government asking for provision of sanctions-free structure as the earlier two structures had in them some people who were in watchlist and some companies were in the list of US sanctions. Pakistan wanted Russia to provide sanctions-free structure to complete the much-touted North-South Gas Pipeline. At last, the Russian government provided on December 26, 2019 the new structure having new companies, claiming that it was a sanctions-free structure.

Earlier, the two structures had some problems linked with sanctions and Pakistan didn’t give in to the pressure from all the corners and kept insisting on providing a Russian majority owned, sanction free structure with pipeline building experience. Pakistan was of the view that it could not afford Russian companies to be part of the project that are in the list of sanctions or watchlist as the country is under the spanner of FATF.

Russia on December 26, 2019 erased Pakistan’s concerns by replacing the earlier companies, which were in the list of sanctions, with a Joint Venture of LLC, Eurasian Pipeline Consortium and Federal State Unitary Enterprise (FSUE), which is the Centre of Operations Services of the Ministry of Energy of the Russian Federation.

In addition, both the countries have decided to complete by June 30, 2020 the agreements on BOOT, implementation and gas transportation tariff. However, it was also decided that the next JCC meeting on the North-South Gas Pipeline will be held somewhere in March 2020 in Moscow.

If all is well by June 30, then physical work on the said pipeline will be initiated, the official said and added that the N-S pipeline is to be laid down with diameter of 42 inch and will be having the capacity to carry 1.2 bcfd gas.

The existing gas infrastructure of Pakistan lacks the 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, the 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 had approved the North-South Gas Pipeline Project (Project) under Government-to-Government arrangement.

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