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Russian company to build North-South gas pipeline in Pakistan by mid-2020

October 16, 2015, 8:18 UTC+3
The capacity of the would-be pipeline is to stand at 12.4 billion cubic meters a year
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© ITAR-TASS/Ruslan shamukov

MOSCOW, October 16. /TASS/. RT-Global Resources, which is part of Russian state corporation Rostec, will carry out the project of the construction of the North-South gas pipeline in Pakistan by mid-2020, Rostec said in a statement.

On Friday, the governments of Russia and Pakistan signed an intergovernmental agreement on the construction of the North-South gas pipeline.

The document was signed by Russia’s Energy Minister Alexander Novak and Pakistani Petroleum and Natural Resources Minister Shahid Khaqan Abbasi.

The 1100 km long gas pipeline will link liquefied natural gas /LNG/ terminals in the port of Karachi in the south of Pakistan with the city of Lahore in the north of the country.

The period of construction is 42 months. The project will be implemented in three stages. On the first stage, by the second quarter of 2018, the gas pipeline will be built.

On the second stage, by the second quarter of 2019, part of compressor stations will be completed.

On the third stage, by the second quarter of 2020, all compressor stations will be commissioned bringing the pipeline to its full capacity, which is 12.4 billion cubic meters a year.

The construction of the pipeline will provide orders for Russian industrial enterprises and will contribute to an increase in non-oil exports. The project will open up a new market for Russian companies.

The project will be implemented in compliance with BOOT model (Build Own Operate Transfer). The built pipeline will be owned and operated by the project company for 25 years. During this period payments for gas deliveries will help the company return the investments and make profit. After that the pipeline will be handed over to the government of Pakistan.

Currently, RT-Global Resources is conducting surveys and engineering work along the pipeline route.

According to Andrei Korobov, general director of RT-Global Resources, the project’s implementation will imply maximum involvement of Russian producers and contractors. In particular, Rostec considers attracting the United Engine Corporation as a supplier of equipment for compressor stations of the future pipeline, he said.

Pakistan’s state gas supplying company ISGAL acts as a partner customer in the project and will pay gas transportation services. In its turn, the government of Pakistan will issue a sovereign guarantee for project financing.

The Russian side is considering possibilities to attract loans from Russian and Chinese development banks with the support of export credit agencies.

RT-Global Resources will create a consortium uniting Russian and foreign investors including Chinese and Pakistani ones as well as potential contractors," the corporation said in the statement.

North-South gas pipeline in Pakistan to cost $2bln-2.5 bln

The construction the North-South gas pipeline in Pakistan will reach $2 bln-2.5 bln, an official with Russian state corporation Rostec told TASS.

The project will be implemented by RT-Global Resources company, which is part of Rostec.

"The costs of the gas pipeline construction will total about $2 bln-2.5 bln," the official said.

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