North-South Gas Pipeline: Ministry allowed to start talks with Russia, Qatar, China

North-South Gas Pipeline: Ministry allowed to start talks with Russia, Qatar, China

Federal Cabinet has reportedly allowed Ministry of Petroleum and Natural Resources to start negotiations with Russia, Qatar and China for construction of North-South Gas Pipeline Project through a Government to Government (G to G) arrangement. The project will transport 1.2 BCFD gas from Karachi to Lahore, sources close to Secretary Petroleum told Business Recorder

Giving details, sources said that Ministry of Petroleum in line with government”s vision is working to address the gas supply-demand gap in the country. Present gas supplies in the country are about 4,000 million cubic feet per day (MMCFD) while constrained demand is over 6,000 MMCFD. Ministry of Petroleum and Natural Resources is pursuing a three-pronged strategy to bridge this widening gap through incentivizing the exploration and production activities for enhanced domestic production, import of gas through transnational pipelines as well as LNG in public as well as private sectors and rationalising of economic use of gas in various sectors through administrative (load management) and fiscal (gradual price rationalisation) measures. 

In order to meet supply-demand gap, Ministry of Petroleum is pursuing certain transnational gas pipeline projects (Iran-Pakistan Gas Pipeline Project and Turkmenistan-Afghanistan-Pakistan-India Gas Pipeline Project) while the LNG Terminals at Port Qasim and Gwadar Port have also been planned to handle the imported Liquefied Natural Gas (LNG) with a capacity to re-gasify approximately 2 Billion Cubic Feet Daily (BCFD) equivalent of natural gas. 

According to Petroleum Ministry, availability of gas will enable Pakistan to meet its ever-growing energy needs and give us an option to diversify gas supply resources through international energy market. The ECC of the Cabinet has already approved Fast Track LNG Import Terminal which is being constructed as per an agreed timeframe and is expected to be commissioned in the 1st quarter of 2015. 

The sources said the existing gas infrastructure was not designed to transport large quantities of gas from Southern to Northern regions of the country as it lacks capacity to handle additional volume of gas supplies. This project is critical for supply of RLNG to the proposed gas-fired power plants in northern Pakistan. The sources further stated that a fast-track implementation of pipeline infrastructure projects is therefore an essential requirement to transport the additional volumes of gas well before the completion of LNG terminals at Gwadar and transnational gas pipeline projects. Both gas utility companies of Pakistan are engaged in augmentation of their gas pipeline infrastructure for receiving the additional volumes of gas into their system. 

Keeping in view the anticipated gas supplies, consideration is being given to undertake the laying of North-South Gas Pipeline, about 1100KM-long, from Karachi to Lahore. The pipeline will not only enable us to efficiently transport imported RLNG but also give transport capabilities for the Iran-Pakistan and TAPI Gas Pipeline Projects which are expected to come online in the next 3 to 5 years. The proposed North-South Gas Pipeline Project will be undertaken through a Government to Government arrangement. North-South Gas Pipeline Project has therefore been planned, which shall be capable of transporting 1.2 BCFD of gas from Karachi to Mid Country. 

As per the agreed Protocol (Joint Statement) of the 3rd Session of Russia-Pakistan Inter-Governmental Commission held in Moscow from 26th-28th November, 2014, the RT-Global Resources, a 100% subsidiary of Russia state corporation “Rostec”, and Pakistani ISGSL expressed an interest in jointly developing the Project namely North-South Gas Pipeline Project under a G to G basis and construction of the floating LNG terminal in Port Qasim, Karachi. At the same time, RT-GR will organise funding for the projects subject to guarantees of Government of Pakistan, assistance in obtaining of which is expected to be provided by ISGCL. 

According to the protocol, ISGCL, as a designed Pakistani entity, also expressed its interest in executing these projects jointly with the RT-GR within the framework of relevant inter-governmental arrangements. The sources said ECC of the Cabinet in its meeting on January 10, 2015 endorsed the following recommendations for consideration and approval of the Cabinet: (i) in principle approval of the North-South Gas Pipeline Project under G to G arrangements; and (ii) Inter-State Gas Systems Limited to be designated as the executing agency to implement the Project under a G to G arrangement in liaison with Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL). 

Subsequently, Cabinet Committee on Energy (CCE) in its meeting on March 13, 2015, approved that negotiations should be initiated on a Government to Government arrangements with Russia, Qatar and China to get best deal. And the Cabinet gave the go-ahead signal to the Petroleum Ministry in its meeting held last week.

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