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Russian Team Coming For Key Talks On $1.7b Gas Pipeline

Russian Team Coming For Key Talks On $1.7b Gas Pipeline

ISLAMABAD: Pakistan and Russia are set to meet next week to strike a final deal on laying a $1.7-billion gas pipeline from Karachi to Lahore, which will carry imported liquefied natural gas (LNG) for overcoming energy crisis in Punjab.

According to officials, the two sides will be deliberating at a time when ministers of Turkmenistan, Afghanistan, Pakistan and India will meet to make headway and award the financing contract of a transnational gas pipeline to French energy giant Total, which will work as a consortium leader.

Separately, a Pakistani team will hold talks with a Russian delegation on the modalities of the Turkmenistan, Afghanistan, Pakistan and India (Tapi) pipeline.

Pakistan and Russia have already signed a protocol for awarding the contract of laying the LNG pipeline to a Russian company in a government-to-government arrangement.

Apart from this, the Interstate Gas Systems, which deals with gas import projects, is working on an LNG pipeline in Gwadar and the Tapi project. A protocol has been inked with China for awarding the $3 billion Gwadar LNG pipeline and terminal contract.

The Economic Coordination Committee (ECC) of the cabinet has given its, in principle, consent for the construction of the 1,100km North South Gas Pipeline from Karachi to Lahore for the supply of re-gasified LNG to proposed gas-fired power plants in northern Pakistan.

The government has planned to set up 3,600-megawatt LNG-based power plants in Punjab in an effort to tackle outages. In this regard, the Ministry of Water and Power is seeking approval of upfront tariff at Rs8.85 per unit through a petition filed with the National Electric Power Regulatory Authority (Nepra).

Officials of the water and power ministry point out that the LNG-fired power plants would help meet the needs of Faisalabad Electricity Supply Company (Fesco), Gujranwala Electric Power Company (Gepco) and Lahore Electricity Supply Company (Lesco), which have been facing a shortfall.

The gap between natural gas supply and demand in the country has widened to 2 billion cubic feet per day (bcfd) with supplies at 4 bcfd.

To bridge the shortfall, the Ministry of Petroleum and Natural Resources is pushing ahead with different gas pipeline projects. In addition to these, LNG terminals will be built at the Port Qasim and Gwadar Port, which will handle imported LNG with an estimated re-gasification capacity equal to around 2 bcfd of natural gas.

In an ECC meeting, it was highlighted that the existing gas infrastructure was not designed to transport large quantities of gas from the southern to northern regions of the country as it lacked the capacity to handle additional volumes.

Therefore, the Karachi-Lahore pipeline is critical for shipping re-gasified LNG to the power plants. A speedy construction of pipeline infrastructure is necessary to transport higher gas volumes well before the completion of LNG terminal at Gwadar and IP and Tapi pipeline projects.

Gas distribution companies – Sui Southern Gas Company and Sui Northern Gas Pipelines – are engaged in upgrading their infrastructure to prepare for handling higher gas supplies in their system.

Not only will the Karachi-Lahore pipeline enable the ministry to efficiently transport imported LNG, it will also help ship the gas to be imported from Iran and Turkmenistan, the two projects which are expected to come online in the next three to five years.

Published in The Express Tribune, February 7th,  2015.

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