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June 24, 2021

Disturbing move: Petroleum Div to pitch Pakistan Stream Gas Pipeline in CCOE

ISLAMABAD: In a rather strange move, the petroleum division (PD) has come up with an alternate plan of Pakistan Stream Gas Pipeline (PSGP), which will be submitted in Cabinet Committee on Energy (CCOE) that meets today (Thursday).

The Petroleum Division has carved out a plan with consultations of Sui Southern and Sui Northern as fall back option under which the consortium of PARCO, Sui Southern and Sui Northern will lay down LNG-3 gas pipeline of 42 inches diameter preempting any failure of talks with Russian government on the Pakistan Stream Gas Pipeline.

It is pertinent to mention that Pakistan and Russia on May 28, 2021 in Moscow signed the amended Inter-Governmental Agreement (IGA) for the flagship project of North-South Gas Pipeline Project which is now renamed as Pakistan Stream Gas Pipeline (PGSP). The cost of the project has been estimated at $2.25 billion by Pakistani officials, which is not yet finalized by the Russian side.The cost will be decided keeping in view the scope of the project, a senior official at the Energy Ministry told The News. “Under the revised IGA, Pakistan will have major shareholding with 74 percent stakes in the pipeline of 1,122 km from Karachi (Port Qasim) to Kasur (Punjab), while Russia will have 26 per cent equity.”

The energy experts say that PSGP will develop Russia’ stake in Pakistan, but the move of petroleum division for presenting an alternate project may upset Russia which is on board since 2015.

The Russian President also gives paramount importance to this project. The ‘powerful circles’ in Pakistan have also played pivotal role in getting amended IGA signed as they want to develop economic and strategic relations with Russia. The experts say that the alternate plan is tantamount to sabotaging the PSGP project which may harm tiles with Russia.

Since the signing of amended IGA, both the countries are bound to sign within 60 days the shareholding agreement, heads of agreement under various commercial arrangements and a Special Purpose Vehicle (SPV) company will also be constituted that to materialize the project.

Both the countries earlier on November 18, 2020 agreed and initialed the amendments in the Inter-Governmental Agreement. However, the formal signing on the project was done on May 28 after delay of almost six months. Both the countries are attaching paramount importance to the project. Russia will increase its stakes in Pakistan by helping build the North-South Gas Pipeline Project. And the proposed pipeline will increase the country’s capacity to transport the imported gas (LNG) from the port city to Punjab. The country’s existing system has the capacity to import and transport RLNG of 1.2 billion cubic feet. The country has only two LNG terminals -- one is owned by Engro and the other by the Pakistan Gas Port.

Two more LNG terminals are being installed, one by Energas and second by Tabeer company. They will increase the country’s ability to import and re-gasify LNG by 1.2-1.5 bcfd. But there is no pipeline available to transport RLNG within the country and the North-South Gas Pipeline will serve the critical purpose.

Pakistan has worked out the cost of the project at $2.25 billion, which is not yet finalized as the input from the Russian side and scope of the project will determine the accurate cost. There are three proposals about the diameter of the proposed pipeline, which include 42 inches, 48 inches and 56 inches. After signing of IGA, all the technical, commercial issues and design with scope of the project will be decided.