Karachi-Kasur gas pipeline project: Pakistan, Russia sign amended gas pipeline accord

ISLAMABAD: In a major development, the three-day Pakistan and Russia talks on 1,122-km high pressure RLNG pipeline from Karachi (Port Qasim) to Kasur (Punjab) ended with amendment in the Inter-Governmental Agreement (IGA) heralding the pavement for new era of strategic relationship between the two countries.

Both the sides had earlier signed an Inter-Governmental Agreement (IGA) in 2015 when Russia was to erect the project with 100 percent financing, but after the GIDC verdict by the Supreme Court, and availability of liquidity with Petroleum Division, the Inter-Governmental Agreement has been amended and the North South Gas Pipeline Project (NSGPP) has been renamed as Pakistan Stream Gas Pipeline Project (PSGPP) with 26 percent equity share from Russia. "Russia has not adopted to keep 49 percent shares in equity offered by Pakistan, but decided to have its equity at 26 percent. It means Pakistan will be having 74 percent equity in the project. The pipeline project will be backed by agreement based on take and pay mode with no sovereign guarantee," one of the participants of the three day talks told The News.

“The talks during November 16-18 witnessed many upheavals and took dramatic turns but with skillful and meaningful role of Special Assistant to Prime Minister on Petroleum Nadeem Babar and Ms Saira Najeeb, MD of Inter State Gas Company, managed to get the IGA amended in the supreme interest of the country with Pakistan having majority shares of 74 percent in terms of equity in the project.”

The 14-member Russian delegation, headed by D L Kapnik, Special Representative of the Russian Ministry of Energy for Project Implementation participated in the talks. The Russian delegation also included representatives from its structure each ETK and TMK and its state-owned company Federal State Unitary Enterprises (FSUE). Both sides have also decided to make a Joint Venture Company (JVC) comprising board of directors with representation from both sides. The company will be named as Russia-Pakistan JVC that will operate the gas pipeline with a leading role of Pakistan.

The JVC Company will hire a third party for carrying out FEED (Front End Engineering Design) for the project. After FEED, it would be decided if the pipeline should have the diameter of either 48 inches or 56 inches with capacity to transport gas by 1.6 to over 2 bcfd.

Pakistan’ gas companies, Sui Northern and Sui Southern, will be assigned to lay down the gas pipeline. However, Russia will be providing the Russian made gas pipeline and compressors and other equipment and it has been clearly conveyed that anything outside Russia, Pakistan’s company will procure itself. More importantly, Pakistan will be interested in the Russian made pipelines and compressors but the prices and quality must be compatible in the open market to make the project cost effective.