Strategic North-South Gas Pipeline: Russia provides Pakistan sanction-free structure for over $2 bn

ISLAMABAD: At last, Russia has provided Pakistan a sanction-free structure for strategic North-South Gas Pipeline at estimated cost of over $2 billion and the government is of the view that the construction work is most likely to start somewhere in June-July this year.

Pakistan has since long been seeking from Russia sanction free-structure and pleading not to make ROSTEC, the mother company of the RT Global, the part of the project as it is facing sanctions.

Pakistan cannot afford to allow such companies as part of the project particularly at a time when Pakistan is under radar of FATF. Now sense has prevailed and Russia has replaced the companies with a Joint Venture of LLC, Eurasian Pipeline Consortium and Federal State Unitary Enterprise (FSUE) which is Centre of Operations Services of the Ministry of Energy of The Russian Federation. The official said that the project has almost delayed by four years till now.

“Yes, we have received a letter from Mr Alexander Novak, Minister of Energy of The Russian Federation written on December 26, 2019 informing about the replacement of the earlier proposed project company now assigning of the project’s realisation rights to the project company ‘North South Gas Pipeline private Limited, a Joint Venture of LLC, Eurasian Pipeline Consortium and Federal State Unitary Enterprise (FSUE) ‘Centre of Operations Services’ of the Ministry of Energy of The Russian Federation,” a senior relevant official at Petroleum Division has confirmed to The News. “Pakistan has asked Russia to initiate discussions on technical and commercial aspects of the project so that technical and commercial agreement could be concluded by March 2020 as suggested by the Russian side.”

The official said that the letter from Mr Novak is a major development for moving ahead towards realisation North-South Gas Pipeline Project and seems to have allayed the main concern of Pakistan stressing for the sanctions-free structure with pipeline building experience of the project implementation company, and now the earlier proposed structure has been become redundant, and there appears no need for seeking illegal opinion from the foreign law firm through Attorney General of Pakistan.

He said that the latest communication from the minister of Energy of the Russian Federation at minister’s level conveying in principle agreement welcoming the participation of the Ministry of Energy of the Russian Federation through ‘Federal State Unitary Enterprise’ a Centre of Operation Services of the Ministry of Energy of Russian Federation and Eurasian Pipeline Consortium ‘LLC’ in JV North-South Gas Pipeline (Pvt) Ltd (NSGPL) with the understanding that the proposed structure is Russian Majority owned and of sanctions-free entities or persons with pipeline building experience.

The existing gas infrastructure of Pakistan lacks capacity to transport additional large volume of gas supplies from Southern to Northern regions of the country. Therefore, keeping in view the expected additional gas supplies in near future, Ministry of Petroleum and Natural Resources has planned to undertake the laying of gas pipeline from Karachi to Lahore under the title “North-South Gas Pipeline Project”.

The ECC in its meeting held on January 10, 2015 approved the North-South Gas Pipeline Project under government-to-government arrangement. The proposed N-S pipeline will be laid down with diameter of 42 inch will have the capacity to evacuate 1.2 bcfd gas.