Pakistan Stream Gas Pipeline Project: Pak, Russia start talks on shareholders’ agreement

ISLAMABAD: A 12-member Russian delegation headed by A A Tolparov, Deputy Director of Department of Foreign Economic Cooperation and Fuel Markets Development, on Monday arrived in Islamabad for the critical make or break talks on Pakistan Stream Gas Pipeline Project (PSGPP).

Both sides held preliminary talks in the afternoon. However from today (Tuesday) they will start formal talks on shareholders’ agreement and Heads of Terms till Thursday. The “Pakistan side headed by Secretary Petroleum Dr Arshad Mehmood, informed the Russian team in the preliminary session that Islamabad is committed to Pakistan Stream Gas Pipeline Project (PSGPP) and wants Russia to be on board. About the alternate pipeline, the Pakistan side clarified to the Russians that it’s negative publicity, saying obviously there are always alternatives available, but that doesn’t mean Islamabad does not favour Pakistan Stream Gas Pipeline,” one of the officials who attended the meeting told The News.

Russian has nominated its official company Pakstream Limited which will negotiate with Pakistan's official company, the Inter State Gas System (ISGS). Both the companies will develop consensus on Heads of Terms and on Shareholding Agreement with Pakistan’s share of 74 percent and Russian share of 26 percent. The corporate and contractual structure of the project is to be jointly developed prior to execution of shareholders agreement. Both the nominated companies will make a Special Purpose Company (SPC). The CEO of SPC will be nominated by Pakistan’s ISGS.

The official of Petroleum Division said Pakistan conveyed to the Russian side that it wants a positive conclusion to the talks as the future of increase in LNG imports hinges on this pipeline structure. In next 2-3 years two more LNG terminals-- one by Enargas and other by Tabeer would come on stream and the completion of this pipeline is imperative before the commissioning of those two LNG terminals. Both the Pakstream Limited and Inter State Gas System will also determine the reserve matters list of general meeting of shareholders and board of directors. Apart from the role of Sui Southern and Sui Northern, the issue of guaranteed rate of return of 26 percent investment by Russian side would figure in the talks which will last till Thursday. Pakistan side does not want to offer any guarantees for profit on Russian investment.

Both the countries signed the amended Inter Governmental Agreement on PSGPP in Moscow on May 28 with the resolve to sign the shareholder agreement and other commercial accords within 60 days. Pakistan’s 'influential quarters' also want the Russian Federation to develop its stakes in Pakistan’s economy through building the PSGPP. The Russian Federation has been working with Pakistan since 2015 on the project.