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February 27, 2020

Mystery shrouds fate of North-South Gas Pipeline

Top Story

February 27, 2020

ISLAMABAD: Mystery continues to shroud the much touted about North-South Gas Pipeline Project (NSGPP) as in contrary to the new sanctions-free structure that Russia extended on Pakistan’s demand for completing the project, the Petroleum Division in a latest scenario has taken U-turn as it along with the new one reconsidered and resent the previous structure also, earlier declared redundant, to Ministry of Law and Justice for analysis and vetting if both structures are free from sanctions or not raising eyebrows of many.

And more importantly, the new initiative of Petroleum Division has put the Russian government in surprise. The project has been delayed almost by four years.

However, in latest development, the Russian energy minister confirmed to his Pakistani counterparty Omar Ayub Khan that N-S Gas Pipeline (Pvt) Limited, a JV of Eurasian pipeline consortium, LLC., and the Russian Ministry of Energy’s entity “ Operational Services Centre’ is the only company nominated from the Russian Federation, side not the companies earlier included in pervious structure.

The previous structure of project implementation company comprising Zarubezhneft and TMK and top man of one of them was reported in watch list of US which is why Pakistan earlier kept on demanding from Russia to present new sanctions-free structure keeping in view the fact that Pakistan is under the FATF (Financial Action Task Force) eye and still in grey list. And after long time the Russian government accepted the demand and allayed Pakistan’s concerns by coming up with the new structure comprising ‘LLC, Eurasian Pipeline Consortium” and Federal State Unitary Enterprise (FSUE)” Centre of Operation Services” of the ministry of energy of Russian Federation, but according to the official letter written on January 23, 2020 by Joint Secretary Syed Tauqir Hussian available with The News, Petroleum Division has now sent the latest and previous structures to Ministry of Law and Justice for detailed analysis and vetting with regard to sanctions.

One of the top most officials of Petroleum Division confirmed the development saying that Secretary Petroleum earlier wrote many letters to Russian Federation pleading that the previous structure is not satisfactory and up to the mark and urging the Russian authorities to provide new sanctions free structure comprising the companies having no inclusion in either sanctions list or watch list. He also disclosed saying that re-consideration of previous structure earlier declared redundant one is beyond the powers or jurisdiction of Petroleum Division and there are ‘powerful centres’ which are behind this move.

This correspondent tried to get version from spokesman of Petroleum Division Ayub Chaudhry and sent him a question through Public Relations Officer (PRO) of the ministry but could not get the answer even after lapse of two days. The spokesman was sent the question which says: “Sir, mystery has started shrouding over the said gas pipeline as the government has again reconsidered the pervious structure with TMK company whose boss was in watch list despite the fact that Russian government has provided new sanctioned free structure on the long standing demand of Pakistan. Now government is going to include TMK also in the race for the project. Sir, my question is that why government is taking U-turn and this has offended the Russian government too. And more importantly don’t you think inclusion of TMK in the race will also be a detrimental at a time when Pakistan is not cleared by FATF. The News could not get the response after reminding the PRO so many times. This correspondent also touched the secretary of Petroleum Division but could not get the response.

However, a copy of the letter written by Petroleum Division to the Ministry of Law and Justice on January 23, 2020 with subject N-S Gas Pipeline Project—Way Forward clearly says: “It is pertinent to mention that of the latest, the 6th Pakistan-Russia Joint Coordination Committee (JCC) meeting was held in Islamabad on January 21, 2020. The Russian side was led by Anatoli Tikhonov, Deputy Minister of Energy, whereas the secretary petroleum headed the Pakistan side. The Russian side has confirmed the change by replacing earlier nominated entity RT Gobal Resources with N-S gas Pipeline Pvt Ltd. (NSGPL), a joint Venture of Federal State Unitary Enterprise (FSUE) “Centre of Operation Services” of the Ministry of Energy of the Russian federation and “Eurasian Pipeline Consortium” LLC, as the only nominated entity and the same is expected in principle by the Pakistan side. It has further been confirmed by the Russian side that none of the entities or persons or shareholders in the revised structure or sanctioned or sanctions watch list and joint venture partners has pipeline building experience.” It further says: “Notwithstanding the above, this division would like that previous structure of project implementation company comprising Zarubezhneft and TMK and the latest one comprising “LLC, Eurasian Pipeline Consortium” and Federal State Unitary Enterprise (FSUE) Centre of Operation Services of the Ministry of Energy of Russian Federation may please be analysed and vetted with respect to sanctions by the Ministry of Law and Justice and Attorney General for Pakistan. In case the Ministry of Law and Justice and AGP’s office finds appropriate to consult the well reputed international law firm, Petroleum Division would be pleased to bear the requisite expenses.”

In earlier letter written to Attorney General of Pakistan on January 3, 2020 of which copy is also exclusively available with The News, also says that after receiving the letter from Ministry of Energy of Russian Federation, dated December 26, 2019 about the replacement of the earlier proposed project with new structure with a joint venture of LLC Eurasian Pipeline Consortium and Federal State Unitary Enterprise (FSUE) Centre of Operation Services of the Ministry of Energy of the Russian Federation. It also mentioned that this letter from Novak, the minister of energy of the Russian Federation, is a major development for moving ahead towards realisation of NSGPP and seems to have allayed the main concern of Pakistan stressing for the sanctions free structure with pipeline building experience of the project implementation company. Given this latest development, their early proposed structure now has become redundant, therefore, at this stage there appears no need for seeking legal opinion from the foreign law firm. This law is being responded at minister’s level conveying agreement to the proposed structure provided that the new structure is Russian majority owned and of sanctions free entities/ persons with pipeline building experience.

However, the Russian government says that the latest sanctions free structures is the last one from it and this one must be considered for completing the project subject to clearance from law ministry. A Novak in a letter written on February 24, 2020 to Omar Ayub Khan, said the agreements reached during the 6th meeting of the Joint Russian-Pakistan coordination Committee on Monitoring of the implementation of the agreement between the government of the Russian Federation and the government of the Islamic Republic of Pakistan on cooperation in the implementation of the aforementioned project as of October 16, 2015 held on January 21,2020. The letter also says that Russian energy minister has sent to his counterpart a letter dated January 29, 2020 with a draft protocol on the amendments to the agreement, the content of which was previously agreed by both sides. At the same time, despite the deadline set in the minutes of the said coordination committee meeting, the draft protocol has not yet been approved by the Pakistani side.