Prime Minister Imran Khan left for Moscow on Wednesday to push for the construction of a long-delayed, multi-billion-dollar gas pipeline to be built in collaboration with Russian companies, an official said. The prime minister’s trip to meet President Vladimir Putin and discuss issues including economic cooperation comes hours after a number of Western nations hit Russia with new sanctions for its military deployment into parts of eastern Ukraine.
“Both countries are eager to launch the project at the earliest,” Pakistan’s energy ministry spokesman told Reuters about the Pakistan Stream gas pipeline. He confirmed that Energy Minister Hammad Azhar is accompanying the PM on the visit.
In an interview ahead of his trip, PM Imran had expressed concern about the situation in Ukraine and the possibility of new sanctions and their effect on Islamabad’s budding cooperation with Moscow. It is unclear how the latest sanctions will affect the project, which would deliver imported Liquified Natural Gas (LNG) from Karachi to power plants in Punjab.
The project is important for Pakistan — particularly the power sector — as the country’s dependence on imported LNG grows in the face of dwindling indigenous gas supplies. The pipeline project has already suffered delays because of earlier sanctions.
“This North-South pipeline suffered, one of the reasons … was the companies we were negotiating with, turned out that US had applied sanctions on them,” PM Imran told Russia Today on Tuesday.
“So, the problem was to get a company that wasn’t sanctioned,” he said of the project.
In 2015, Russia and Pakistan agreed in principle to build a 1,100 km-long pipeline to deliver imported LNG from Karachi to power plants in Punjab. The pipeline’s designed annual capacity stands at 12.4 billion cubic metres (bcm), with the possibility to be increased to 16bcm. The cost will require investments of between $1.5bn, according to Russia, to as much as $3.5bn, estimated by Pakistan, with 26 per cent of it to be financed by Moscow and the remaining 74pc by Islamabad.
The project was to be launched in 2020, but Russia had to replace the initial participant after the company was hit by western sanctions not related to the Pakistan Stream project. Currently the pipeline, a rare example of Russian participation without state gas company Gazprom, involves the Eurasian Pipeline Consortium, steel pipe maker TMK, which produces steel pipelines for the energy sector, and Operational Services Centre run by the Russian Energy Ministry.
Russian shareholders expect to return their investments from gas shipping fees. Currently, feasibility studies are taking place on the project but there is no firm date set for the launch. According to Russian media reports, shareholder agreement for the Pakistan Stream should be signed this month.
On May 28, 2021, Russian Energy Minister Nikolai Shulginov and Pakistan’s ambassador in Moscow Shafqat Ali Khan signed an agreement on behalf of their countries to build the Pakistan Stream gas pipeline.
