Pakistan and Russia on Friday signed an inter-governmental agreement for the construction of 1,100-kilometer (684-mile) gas pipeline, stretching from Karachi to Lahore in the country.
Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi and Russian Energy Minister Alexander Novak signed the agreement in Islamabad.
Prime Minister Nawaz Sharif witnessed the signing ceremony, that reflects the importance that Pakistan attaches to the pipeline.
The $2 billion project, to be built by Russian state-owned industrial conglomerate Rostec, with a capacity of 12.4bcm per annum will connect liquefied natural gas terminals from the port city of Karachi to Lahore, helping the country deal with crippling energy shortages.
Rostec, run by a close friend of Russian President Vladimir Putin, would finance, own and operate the pipeline for 25 years.
Rostec’s partner in the project will be Inter State Gas Systems (ISGS) controlled by Pakistan. The Pakistani side undertakes to grant the rights to use land plots necessary for the project implementation and carry out research route laying works. The first phase of the project will be completed by December 2017.
Shahid Khaqan Abbasi said the project will prove to be a milestone to overcome energy crisis. He expressed the confidence that the construction work on the project will be completed by December 2017.
Shahid Khaqan Abbasi told that the project was of great significance for Pakistan as it will help carry the additional volume of imported gas from the country’s South to rest of the country.
He said the pipeline would develop a proper mechanism for the transportation of gas from South to other parts of country, for which no system existed at present.
He said the North-South pipeline project was part of the government’s vision to fulfill the country’s energy needs on priority basis.
He said China was also expected to collaborate in execution of the gas pipeline project, which will be completed in 30 months. The project will be capable of transporting 1.2 billion cubic feet of gas from Karachi to Lahore by laying 42 inch diametre pipeline.
Russian Minster Alexander Novak said his country will provide all possible technical support and expertise to enable the company complete the project in time.
Adviser on Foreign Affairs Sartaj Aziz who was also present at the preparatory meeting said Prime Minister Muhammad Nawaz Sharif had discussed the project with Russian President Vladimir Putin on sidelines of the recent Ufa Summit.
The Economic Coordination Committee (ECC) had approved the North-South Gas Pipeline Project under government-to-government agreement in January 2015. The draft inter-government agreement was approved by Prime Minister Nawaz Sharif in July 2015.
Pakistan’s key ally China is currently financing the construction of a gas pipeline from the southern town of Nawabshah to the deepwater port of Gwadar, not far from Iran.
Once that is built, Pakistan will “only have to build another 80 kilometres” of pipeline to link up to Iran, and could eventually extend the project as far as its northern border with China.