ISLAMABAD: In a major development, Pakistan and Russia’s three-day talks on a 1,122 km long high-pressure RLNG pipeline from Karachi (Port Qasim) to Kasur (Punjab) concluded with an Intergovernmental Treaty (IGA) amendment marking the pavement for a new era of strategic relations between both countries.
The two sides had previously signed an Inter-Governmental Agreement (IGA) in 2015 when Russia would set up a project with 100 percent financing, but after the GIDC ruling by the Supreme Court, and the availability of liquidity with the Petroleum Division, the Inter-Government Agreement was amended and the Pipeline Project North South Gas (NSGPP) has been renamed as Pakistan Gas Flow Pipe Project (PSGPP) with a 26 percent equity stake from Russia. “Russia has not adopted to retain a 49 percent stake in the equity offered by Pakistan, but has decided to own 26 percent of the equity. That means Pakistan will have 74 percent equity in the project. The pipeline project will be supported by an agreement based on take and mode of payment. without guarantees of sovereignty, “one participant in the three-day talk told The News.
“The talks during November 16-18 saw a lot of upheaval and changed dramatically but with the skillful and meaningful roles of the Prime Minister’s Special Assistant for Petroleum Nadeem Babar and Ms Saira Najeeb, MD of the Inter State Gas Company, managed to secure an IGA amendment in the highest interest of the country. with Pakistan owning a majority stake of 74 percent in terms of equity in the project. ”
The 14-member Russian delegation, led by DL Kapnik, Special Representative of the Russian Ministry of Energy for Project Implementation participated in the talks. The Russian delegation also included representatives from their respective structures ETK and TMK as well as state-owned companies Federal State Unitary Enterprises (FSUE).
The two parties have also decided to create a Joint Venture Company (JVC) which consists of a board of directors with representatives from both parties. The company will be named Russia-Pakistan JVC which will operate the gas pipeline in Pakistan’s leading role.
The JVC company will hire a third party to carry out the FEED (Front End Engineering Design) for the project. After the FEED, it will be decided whether the pipes should be 48 inches in diameter or 56 inches in diameter with a capacity to carry gas of 1.6 to more than 2 bcfd.
Pakistani gas companies, Sui Northern and Sui Southern, will be tasked with laying the gas pipeline. However, Russia will provide Russian-made gas pipelines and compressors as well as other equipment and it has been clear that anything outside Russia will be bought by Pakistani companies themselves. More importantly, Pakistan will be attracted by Russian-made pipes and compressors but price and quality must match on the open market to make the project cost effective.