Four-day secret talks on $3 bn gas pipeline: Pakistan, Russia close to finalising Shareholders Agreement

ISLAMABAD: Pakistan and Russia have reached close to finalizing the over 100 pages document of Shareholders Agreement after four-day talks on the $3 billion Pakistan Stream Gas Pipeline Project (PSGP) from Karachi to Kasur Punjab, which is a positive development.

Russia sent its delegation to Islamabad on November 16 after making its mind on new demand from the Petroleum Division, seeking renegotiation on the issues already settled for talks on the shareholding agreement and facilitation agreement. The talks continued for four days till November 18, which were kept secret and every participant was under oath from both sides that they will not utter any word to media persons. They were not allowed to carry their cell phones in the room where the talks were held.

Moscow earlier held back its delegation from holding talks scheduled from November 9, 2021 in Islamabad on shareholding agreement in the wake of the demand of Petroleum Division for re-negotiations on issues already settled in inter-governmental agreement (IGA) and approved by the federal cabinet.

Under the amended IGA, Pakistan will be having 74 percent shares and Russia 26 percent in the project. However, sources claimed that both sides once again failed to sign the Shareholding Agreement. The News contacted the secretary Petroleum Division, asking if a shareholding agreement has been signed or more talks were needed. He said: "We are continuously working and the pre-final draft was finalized on Wednesday but we are

working on refining it to give it a final shape.” He said that the shareholding agreement document has more than 100 pages having multiple aspects, which are commercially and strategically important. He also said that talks remained very positive and on the right track, saying that lengthy discussions were held on many aspects of risk assessments and risk mitigation.

The press release issued late Thursday night says that the fifth Joint Technical Committee Meeting of the Pak Stream Gas Pipeline Project was held in Islamabad from 16-18 November, 2021. "The respective delegations held extensive consultations over the course of these discussions. The parties have expressed satisfaction over ironing out major outstanding issues in the Shareholders Agreement. The talks were held in an amicable environment that was characterised by mutual agreement, consensus and unanimity of views that has led to achieving stellar progress and very encouraging forward movement on the Shareholders Agreement. Both parties have also discussed broad contours of facilitation agreements, project financing, executional structure, formation of SPV, contracting strategy and the mechanism for the identification of the PMC and the FEED contract. Moreover, site surveys in Pakistan, manufacturing site visits in the Russian Federation were also discussed.

"The consensus and extremely encouraging headway achieved during the period of these talks has laid the groundwork for finalisation of a comprehensive Shareholders Agreement of Pak Stream Gas Pipeline. The momentous progress on major outstanding issues in the Shareholders Agreement during the parleys was attributed to mutual cooperation, understanding and a positive spirit of consensus. It is noteworthy that such issues were settled in a limited span of time. The untiring efforts of both parties which have committed themselves to the project can be ascertained by the series of agreements that have been concluded this year i.e. change in the project’s name/modalities, technical parameters, Head of Terms and the current progress on the Shareholders Agreement. The Russian side lauded their Pakistani counterparts for their forward-looking approach, thanked them for their hospitality and expressed confidence over the current state of PSGP. Both parties pledged to proceed ahead with renewed zeal, enthusiasm and remain undeterred by any hindrances. The parties resolved to meet the project’s schedule and timelines."