RT-Global Resources and ISGS are to discuss commercial terms for the construction of the ‘North-South’ gas pipeline.

Commencing on 4th August, the Ministry of Petroleum and Natural Resources of Pakistan and RT-Global Resources (a 100% subsidiary of Rostec) will hold a series of meetings in Islamabad (Pakistan) to achieve a consensus on the commercial aspects of the construction project for the ‘North-South’ gas pipeline in Pakistan.

During the negotiations, the parties will pay special attention to the tariff for pumping gas, as well as other commercial operating conditions affecting the project’s economics. On the Pakistani side, the talks will be attended by the Pakistani nominated company ISGS and the Tariff Committee specifically established by the Government of the Islamic Republic of Pakistan for negotiations on the project.

This new round of talks aims to conclude the negotiation stage and allow the parties to sign a document enshrining the fundamental conditions of the project. This will make possible preparations for the signing of main commercial agreements on the construction of the ‘North-South’ gas pipeline by 16 October 2016, in accordance with the schedule specified in the intergovernmental agreement.

The Economic Coordination Committee has agreed the creation of an SPV (Special Purpose Vehicle) in Pakistan, the responsibilities of which will include responsibility for implementing the project, that meets the parameters of the intergovernmental agreement.

The Economic Coordination Committee has taken a decision to implement the project on BOOT (Build, Own, Operate, Transfer) contract terms, under which the constructed gas pipeline after its commissioning will be owned and operated by the project company for 25 years and then transferred over to the Pakistani side.

Reference

In October 2015 in Islamabad, an intergovernmental agreement was signed between the governments of Russia and Pakistan on the construction of the ‘North-South’ gas pipeline from Karachi to Lahore. The ‘North-South’ gas pipeline, having a length of 1,100 km and a capacity of up to 12.3 billion cub. m. a year, will connect liquefied natural gas (LNG) terminals in the ports of Karachi and Gwadar in southern Pakistan with power plants and industrial gas consumers in Lahore in the north of the country.

Responsibility for implementing the project has been entrusted to the Russian company RT-Global Resources (a 100% subsidiary of Rostec). Participation in the project to construct the pipeline will ensure additional orders for Russian industrial enterprises in the oil and gas sector and increase non-raw-material exports. Implementation of the project in Pakistan will provide a new market for Russian companies and opportunities for new projects in the region’s energy infrastructure. The ‘North-South’ gas pipeline from Karachi to Lahore is the first joint project in a long time between Russia and Pakistan being carried out on the basis of an intergovernmental agreement.⁠