Pakistan has formally invited Russia's Gazprom, the largest extractor of natural gas in the world, to participate in laying gas pipeline under Iran-Pakistan (IP) gas pipeline deal. Iran has already welcomed Gazprom involvement in IP gas pipeline project.
Sources told Business Recorder that the Russian giant, Gazprom, has also expressed interest in building energy storage facilities in Pakistan.
A two-member Pakistan's delegation, led by State Minister for Finance and Economic Affairs Division (EAD) Hina Rabbani Khar, in a meeting of Pak-Russia Inter-Governmental Commission (IGC) held on September 22, 2010 in Russia, had invited Gazprom to participate in the development of IP gas pipeline project.
Pakistan and Gazprom have already signed a Memorandum of Understanding (MoU) for laying the 950 km gas pipeline under the IP gas pipeline project. "But the two sides are yet to enter into final agreement to build the pipeline to transmit gas from Iran to Pakistan under IP project," sources said.
They said that Russian President Dmitry Medvedev and Pakistan's President Asif Ali Zardari had also discussed the option to involve Gazprom in the IP project, during their meeting in August 2010 held in Russia . The two sides had decided to convene a meeting of Petroleum Ministers of Russia and Pakistan for detailed discussion on the proposal.
"Petroleum Minister Naveed Qamar is expected to accompany President Asif Ali Zardari during his upcoming visit to Russia to hold a meeting with his counterpart, and discuss the proposal relating to Gazprom's involvement in the IP project," sources said.
Pakistan and Iran have already signed sovereign guarantee agreement on IP. The project will be funded through public-private partnership and the capital cost for the Pakistan section is estimated at $1.65 billion.
Pakistan and Iran have signed Gas Sale and Purchase Agreement (GSPA) for import of 750 million cubic feet daily (mmcfd) of natural gas with a provision to increase gas volume to 1 bcfd. The imported gas volume is nearly 20 percent of Pakistan's current gas production and the supply will be for a contract period of 25 years, renewable for another five years. All of the imported gas will be dedicated to the power sector.
Iranian gas would support approximately 5,000 megawatts (MW) of power generation resulting in significant annual savings compared to alternative fuels such as high sulphur furnace oil, liquefied natural gas, and coal. As per current project implementation schedule, the first gas flow is targeted by the end of 2014.
A pre-feasibility study of the IPI project was undertaken in 2006; to further develop the project, a bankable feasibility study as well as Front End Engineering Design (FEED) will be undertaken that would enable the project managers to approach prospective investors and financiers.
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