The $45 billion worth of agreements signed by Pakistan and China earlier this month included a multibillion-dollar LNG pipeline and terminal deal, which will work as an alternative to the troubled gas import project with Iran as the pipeline will be extended to the Gulf state after international sanctions are lifted, according to a report in the local media.
“The agreement was signed during Prime Minister Nawaz Sharif’s visit to China. It is a state-to-state deal and no bidding will be held for the award of contract,” the report quoted an official.
According to initial estimates, the project is expected to cost $3 billion – $1 billion will be needed to lay the pipeline from Gwadar and over $2 billion will be required to construct the terminal with liquefied natural gas (LNG) handling and re-gasification facilities and to develop large storages.
China will meet 85 per cent of the financing needs for constructing the LNG pipeline from Gwadar Port to Nawabshah.
The Ministry of Petroleum and Natural Resources is seeking the support of economic decision-makers for relaxing the Public Procurement Regulatory Authority (PPRA) rules.
“The ministry will approach the Economic Coordination Committee (ECC) to win its approval for easing PPRA rules,” the official said. “This will clear the way for direct award of a lucrative contract to a Chinese state-owned company.”
This will be the second LNG terminal in the country as a fast-track terminal is already being built by Elengy Terminal Pakistan Limited (ETPL) at the Port Qasim, which is likely to be completed in February next year.
The LNG pipeline will be extended from Gwadar to Iran for gas import when sanctions on Tehran are lifted. Its capacity will be one billion cubic feet per day.
The pipeline will have the same specifications that were proposed for the Iran-Pakistan gas pipeline including a diameter of 42 inches.
According to the report, since Pakistan has not been able to lay a 781km pipeline from the Iranian border to Nawabshah because of its failure to tap foreign finances, it has decided to build the pipeline from Gwadar to Nawabshah in partnership with China.
This will transport at least 500 million cubic feet of gas per day (mmcfd) after re-gasification of imported LNG.