Pakistan, Russia sign $10 billion offshore gas pipeline deal

September 28, 2018: Pakistan and Russia have signed an inter-governmental agreement to conduct feasibility study for building $10 billion offshore gas pipeline to supply gas from Russia to Pakistan.

Russian government has planned this project to capture Pakistani market in order to enhance economic cooperation and bilateral relation between the two countries.

As per the agreement, the Russian energy giant Gazprom would conduct the feasibility study on its own expenses to assess economic viability and cost of the project.

Pakistan has been witnessing shortage of gas supply for many years, primarily due to the reduction in gas supply coupled with offset in new additions caused by depleting old deposits.

The former PML-N government had tried to tackle the gas crisis by importing liquefied natural gas (LNG) from Qatar under a 15-year agreement, and bringing supplies from other sources as well.

The increasing popularity of China-Pakistan Economic Corridor (CPEC) amongst foreign investors has been believed to increase the demand for energy sources in the future.

The Special Economic Zones (SEZs) are being constructed under the CPEC and provide tax and duty exemptions to investors that would help boost industrialisation in the country.

Therefore, the offshore gas pipeline will meet energy needs of industries being set up in the economic zones along CPEC route.

Moreover, this economic cooperation would enable Pakistan to gain access to the Russian markets in order to boost its exports.

ISGS is also working on the $10 billion Tapi gas pipeline which will connect South and Central Asia. Construction work on the scheme in Pakistan is planned to start in March 2019.

These projects are being deemed as a game changer for Pakistan’s economy as they will not only lead to regional connectivity but will also meet growing energy needs of the country.

The MoU was signed by Additional Secretary Sher Afgan on Pakistani government’s behalf, whereas Ministry of Energy and Petroleum Division, and Deputy Prime Minister Anatoly Yanovsky on behalf of the government of Russia.

Mobin Saulat, Managing Director Inter-State Gas Systems (ISGS), a state owned company with a mandate to build gas pipelines and gas import projects, was also present during the signing ceremony.

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