$2 billion gas pipeline gift set to warm up Pakistan-Russia ties

Russian natural gas will warm up relations with Pakistan after six decades of cold war which often had turned into hot war as Islamabad was siding with far away Washington.
Pakistan is currently seeking international cooperation, investment and joint ventures to boost all types of energy - natural gas, electricity and petroleum - to shore up its industrial production and gross domestic product (GDP), which has fallen nearly two per cent to 4.5 per cent in fiscal year 2016. The under negotiation cooperation with Russia and Gazprom is part of this plan. Besides such bilateral arrangements, Pakistan also hosted an international conference of investors in Islamabad and attracted investment in the energy sector as well as other industries and businesses.
The gift from Moscow is the planned $2 billion Russian investment in 1,100-kilometre natural gas pipeline, from Karachi to Lahore. The agreement to this effect has been signed by Pakistani Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi and Russian Minister for Energy Alexander Novak in Islamabad.
"The project will take cooperation between Russia and Pakistan to a new level," Novak said.
The pipeline from Karachi in the South to Lahore in the North will "help carry imported gas". The project will be completed in 30 months. It will transport 1.2 billion cubic feet of gas from Karachi to Lahore through a 42-inch diametre pipeline. The pipeline will be completed by December 2017. It will be operated by the manufacture for 25 years, and then transferred to Pakistan government.
"The pipeline will develop a proper mechanism for transportation of gas from the south to the other parts of the country for which no system existed," Abbasi said after signing the agreement, which was witnessed by Prime Minister Nawaz Sharif.
Sharif and Novak, also "discussed the possibility of greater Russian investment in Pakistan's oil and gas sectors", Abbasi told this writer.
Alongside the proposed south-north pipeline, Moscow's state-owned natural gas giant Gazprom is considering hydrocarbon exploration and production projects in Pakistan, according to an inter-governmental commission.
Abbasi, last week, underlined the need for an early completion of South-North gas pipeline project to meet the growing energy demand. The gas will be, partly, used for power generation, and fertilizer production. "The government wants to start construction work of the pipeline immediately so that its first phase is completed by December 2017," he asked Viktor P. Ivanov, co-chairman of Pakistan-Russia Inter-governmental Commission (IGC) on trade, economic, scientific and technical cooperation between the two countries.
The Russian Company Rostec will construct the 1,100-kilometre pipeline, which will connect liquefied natural gas (LNG) terminals located in Karachi to terminals in Lahore. Ivonov also offered Pakistan to supply LNG so that it can bridge the increasing gap between demand and supply of gas in this country. He also briefed Abbasi about the Russian experience in developing energy infrastructures as well as in oil and gas sectors. Rostec has now been advised to start he pipeline construction within two months, so that it is completed by December 2017.
The Pakistan-Russia cooperation is now expected to expand into the field of oil exploration, Abbasi said. The director-general of Tetneft Petroleum Company, one of Russia's biggest oil producing company based in Tatarstan province, who accompanied he Russian delegation, offered Pakistan its cooperation in the field of exploration and production of oil and gas. "We hope it will come through and make a big contribution in exploring and production of oil which we urgently need," Abbasi said. The Tetneft's director-general informed the minister thar "in Tatarstan 50 to 60 universities are producing petroleum experts and there is a possibility to initiate students exchange programme between he two countries". He invited Abbasi to visit some of the Tatarstan projects and inspect oil and gas facilities operating there. Abbasi accepted the invitation and promised to make an early visit to Tatarstan. Pakistan also will look into the Russian offer to supply LNG.
Pakistan and Russia have also just signed five memorandum of understandings (MoUs), and formed working groups to make a big boost in various fields of economy. Finance Minister Ishaq Dar signed the MOUs for Pakistan and Ivonov for Russia at the conclusion of Fourth Inter-Governmental Commission (IGC). They covered engagement of Russian counterparts in the energy sector, scientific and technical cooperation settlement of mutual financial claims and obligations, finance and banking, and trade.
While a big cooperation in the field of energy is planned to take place, according to these negotiations, in the coming days, Turkmenistan, a former state of the Soviet Union, is going ahead with building its own and separate $10 billion natural gas pipeline. The Turkmenistan, Afghanistan-Pakistan-India pipeline (TAPI) will have a capacity to supply over 60 billion cubic metres of natural gas annually to these countries. Its construction is slated to be inaugurated on December 25.
At the same time, Pakistan has just earned a good response of foreign investors to expand its energy sector. Dr Miftah Ismail, chairman Pakistan Board of Investment (BoI), says as a result of "a successful investment conference that has just concluded in Islamabad, 620 foreign and domestic have made solid offers to invest in the energy sector".
He said 235 Pakistani businessmen living abroad, and 385 local businessmen, making a total of 620 investors attended the investment conference hosted by BoI. Among them General Electric Company of US announced that it will immediately invest $50 million in Pakistan. Shell Petroleum will invest in energy infrastructure and import of LNG. South Korea has already investing in the power sector.
Mohammad Zubair, minister of state for privatisation, also announced that the government has received offers for purchase of 12 state sector enterprises at a cost of $4.5 billion during fiscal year 2015-16. Foreign investors have also shown interest to buy several other government-owned projects or government's share in the nationalised industries and businesses, including Oil and Gas Development Corporation, Allied Bank Limited, Habib Bank Limited, Lahore Electricity Supply Company, Islamabad Electric Supply Company, Faisalabad Electric Supply Company, and Pakistan International Airlines.
The writer is based in Islamabad. Views expressed are his own and do not reflect the newspaper's policy.