Energy deal:Moscow to lend $2b for LNG pipeline

Society Pakistan & World Affairs
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perfect diplomatic stance … no permanent enemies, no permanent friends … permanent is ONLY one thing and that is Interests of Pakistan ! Moscow needs new market due to decreasing Oil Revenue and Pakistan needs energy and expertise of Russians

Energy deal: Moscow to lend $2b for LNG pipeline

By Zafar Bhutta
Published: April 18, 2015

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[RIGHT]Petroleum minister says Russia will start its first LNG exports in 2016 and has also offered to sell gas to Pakistan. PHOTO: FILE[/RIGHT]
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ISLAMABAD: **Pakistan and Russia have finalized an agreement under which Moscow will lend Islamabad $2 billion to lay a pipeline that will transport liquefied natural gas (LNG) from Karachi to Lahore, Petroleum Minister Shahid Khaqan Abbasi says, adding that in return Russian companies will be awarded the contract to build the pipeline.

The formal agreement between the two sides is expected to be signed next month, following which Pakistan will also sign a commercial agreement with a Russian firm that Moscow will identify as its preferred contractor to build the 1,100-kilometre pipeline. According to the agreement, the contract will be awarded without any formal bidding process.

The financing for the LNG pipeline comes as a prelude to Russia’s offer to sell LNG to Pakistan.

**Russia is the second-largest producer of natural gas in the world, and is seeking to diversify its export markets after a spat last year with the European Union, its main buyer, over Ukraine.
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“Pakistan and Russia have finalised an LNG pipeline deal in a recent meeting in Moscow and the two countries will sign a government-to-government basis deal next month,”**

Petroleum Minister Abbasi told The Express Tribune. “Russia will start its first LNG exports in 2016 and has also offered to sell gas to Pakistan.”

This is not Islamabad’s first major cooperation agreement with Moscow over infrastructure. The former Soviet Union had financed the construction of the** state-owned Pakistan Steel Mills** under a similar arrangement. The Soviets had also helped supply some of the** oil drilling equipment for the state-owned Oil and Gas Development Company. Some of that equipment is in use till date.
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Currently, Pakistan is working on two pipelines to transport re-gassified LNG from Karachi to the northern parts of the country. The first is a pipeline that will connect the Gwadar Port to the main natural gas pipeline hub in Nawabshah. The second will lay a direct pipeline from Karachi to Lahore.

The government has signed an initial deal with** China to award a $3 billion LNG terminal and pipeline project to a Chinese contractor** in a similar financing-for-guaranteed-contract arrangement.

Islamabad had initially offered Moscow and Beijing a similar arrangement for the Iran-Pakistan pipeline, but American and European sanctions against Tehran scuttled that project – at least for now.

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An LNG import terminal, owned and operated by the Engro Corporation, an industrial conglomerate, is already up and running, though there is, as yet, no agreement to import natural gas from Qatar, the third-largest natural gas producer in the world and closest to Pakistan. There is also no infrastructure yet that would allow that natural gas to be transported upcountry.

“We are negotiating an LNG supply deal with Qatar which will be finalised soon,” Abbasi said.
Pakistan’s existing pipeline network has the capacity to transport 320 million cubic feet of gas per day (mmcfd) in re-gassified LNG. Consumption in Punjab and Khyber-Pakhtunkhwa, as well as upper Sindh, however, exceeds 3,000 mmcfd, which is why the new pipelines are badly needed.

In order to finance the payback of the loans needed to construct the pipelines, the Oil and Gas Regulatory Authority (Ogra) has allowed the state-owned gas utilities, Sui Northern Gas Pipelines (SNGP) and Sui Southern Gas Company (SSGC), to start charging consumers more for their gas bills every month. SNGP and SSGC are expected to invest $750 million and $300 million respectively to finance the LNG pipeline.

*Published in The Express Tribune, April 18[SUP]th[/SUP], 2015.

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Re: Energy deal:Moscow to lend $2b for LNG pipeline

But it’s a loan right? Wuts the interest rate and in how much it has to be payed back?

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Re: Energy deal:Moscow to lend $2b for LNG pipeline

well nobody gives you $2b in a charity.It has to be loan and let Pet. Ministry work out and finalize the contract details only then it would reveal the terms & conditions

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Re: Energy deal:Moscow to lend $2b for LNG pipeline

Pakistan, Russia To Cooperate In Petroleum And Energy Sectors | The News Tribe

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Re: Energy deal:Moscow to lend $2b for LNG pipeline

Moscow & Islamabad coming closer

Russia announces 50 scholarships for Pakistani students

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Re: Energy deal:Moscow to lend $2b for LNG pipeline

so they “lend” money to Pakistan, charge interest on it (possibly other terms as well) and the contract has to be given to Russian company as well, great.

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Not two billion but 1.5 billion is the right number…1.5 billion as gift not charity. Details will be made public when it will be too late to do anything.
PS: ظہر سے مغرب تک چلنے والا نندی پور یاد ہے?

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Re: Energy deal:Moscow to lend $2b for LNG pipeline

Bloomberg

Russia Agrees to Build Pakistan Gas Line to Tap China Funds

Elena Mazneva

Updated on October 16, 2015 — 1:54 AM PDT

  • North-South line to run from LNG terminals by end-2017
  • Russia’s state-run Rostec to manage project, organize funding

Russia agreed to build and possibly run a planned natural gas link in Pakistan as President Vladimir Putin seeks to bolster the country’s influence in the Middle East and Asia.

The countries signed an intergovernmental agreement for a pipeline that would connect liquefied natural gas terminals in southern Pakistan and its energy-hungry north, with construction to be completed by late 2017, Pakistan’s Petroleum Ministry said in a statement Friday.

The line will reach its project capacity by early 2020, Russia’s Energy Ministry said in a separate statement. A unit of Russia’s Rostec State Corp. will manage the project and invite foreign investors, including China, to participate.

Putin is seeking allies in Asia and the Middle East in an effort to break out of international isolation caused by the Ukrainian crisis, while Russia’s military build upin Syria has contributed to tensions, especially with the U.S. The deal with Pakistan comes after more than a decade of talks about gas-pipeline projects.

“Construction of the North-South pipeline brings trade and economic cooperation of Russia and Pakistan to a new level,” Russian Energy Minister Alexander Novak said in the statement. He and his Pakistani counterpart Shahid Khaqan Abbasi signed the accord in Islamabad in the presence of Prime Minister Nawaz Sharif, according to the statement.

Russia is studying funding from Russian and Chinese development banks for the link, the ministry in Moscow said without elaborating. A project company, set up by potential investors, will own and run the 1,100 kilometer (684 mile) pipeline over 25 years, according to the statement.

The link would ship as much as 12.4 billion cubic meters of gas per year, which is about 30 percent of Pakistan’s current consumption

Russia Agrees to Build Pakistan Gas Line to Tap China Funds - Bloomberg Business

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Re: Energy deal:Moscow to lend $2b for LNG pipeline

So pipe line will be built from Karachi or Gawadar port to north and completed in 1917. Who will be supplier of LNG and at what rate? What happened to IPL? According to your above promotional news, this project was initiated by Mush government in 2005, will not be completed by the end of your pir murshid’s tenure. Who knows its fate becomes same as IPL but your promotional news pakion ko bewaqoof bananay ke leay kaafi hay :slight_smile:

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Re: Energy deal:Moscow to lend $2b for LNG pipeline

1100 km KHI to LHR LNG pipeline and LNG terminal at KHI will be build by Russian state company Rostec and is used by SNGPL (Sui-Northern System) to cater gas shortages in Punjab and NWFP mostly by CNG stations, 3600MW LNG Plants being installed in Punjab (Bhikki, Haveli Bahdur Shah & Baloki), DH Fertilihzer in Sheikupura, FFC in Goth Machi, RYK and other industries of Punjab & NWFP.

700 km Gwadar-Nawabshah LNG Pipeline will be built by China Petroleum Pipeline Bureau, a subsidiary of CNPC (China) is primarily for SSGPL (Sui-Southern) System for Sindh Industry,CNG stations,Engro Fertlizers Dharki plant etc. Once it will be completed, only requires 80 km of pipeline link to connect this 42’ Pipeline from Gwadar to Iran so by mid 2018, the same Gwadar-Nawabshah Pipeline will be converted into IP Line (Iran-Pakistan Pipeline).

QatarGas (QG) is the world biggest supplier of LNG considering most suitable for Pak due to least distance from Gwadar. Australia is another option coming up with mega LNG plants targetting mostly Asian markets (Japan,Korea,India etc).Brent Crude is constantly in downward spiral move so LNG proposed cost will be around $7.5/mmbtu

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Re: Energy deal:Moscow to lend $2b for LNG pipeline

So why are you attributing to these projects to PML(N)? These projects were started by PPP and former Mush government.

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Re: Energy deal:Moscow to lend $2b for LNG pipeline

Work on $2.5bn North-South Gas Pipeline to begin in July

SHAHAB NAFEES — PUBLISHED ABOUT 13 HOURS AGO

KARACHI: Work on a $2.5 billion Karachi-Lahore gas pipeline will start from July and talks on Iran-Pakistan gas pipeline will be resumed next month, Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi said on Wednesday.

The 1,100km Karachi-Lahore pipeline, capable of carrying 12.4bcm (billion cubic metres) gas a year, will connect LNG terminals in Karachi with consumption centres near Lahore. The project, which will be called North-South Gas Pipeline, is expected to be completed by December 2017.

Under a commercial agreement signed between Pakistan and Russia in October 2015, Moscow would provide a loan of $2bn in return for the award of the contract to its state-run firm RT Global, an arm of Russia State Corporation.

Speaking at an event organised by Bakri Pakistan to mark its 10 years of presence in the country, Mr Abbasi said that despite a plunge in international crude prices, oil firms had no reason to worry as prospects are bright in the long run.

But he reiterated that LNG was the only cost-effective solution for the country’s energy problems.
He said Pakistan and Iran would begin talks next month on the gas pipeline in the wake of lifting of international sanctions against Tehran.

The United Nations, European Union and the United States earlier this month lifted crippling economic sanctions on Iran after it agreed to curtail its nuclear ambitions.

The minister has also recently said that global oil price rout has made LNG economically viable for consumers at home, adding that the price of LNG delivered in Pakistan now works out at around $5.50 per million British thermal units (mmBtu).

His estimates were based on price offered by Russian firm Gunvor at 13.37pc of Brent for five years and then matched by Qatargas for 15 years.

Bakri Pakistan plans to merge two oil marketing companies, Bakri Trading Company Pvt Ltd and Overseas Oil Trading Company Pvt Ltd, established in August 2005. These companies are “in the advance stage of merger”, the company said in statement.

The merged company would then be listed on the Pakistan Stock Exchange through an initial public offering (IPO), which is expected by the end of 2017, Bakri’s Group Company CEO Hussain Al Shammaa told Dawn. However, he said it is too early to say how much money the IPO is expected to raise.

Key business of Bakri Pakistan, a 100pc foreign investment of Saudi Arabia’s Bakri International Energy Company, includes procurement of black and white oil products from local and international suppliers, storage and supply of petroleum products to its retail outlets and power generation companies.

The company, which has over 300 retail outlets, has established storages and terminals at Port Qasim, Machike and Shikarpur over the years. It further plans to develop storage points at Daulatpur, Mehmood Kot and Sihala. Its under-construction terminal at Shikarpur is planned to be operational during this fiscal year.
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Published in Dawn, January 28th, 2016*

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Re: Energy deal:Moscow to lend $2b for LNG pipeline

Finance ministry delays release of $300 million for Gwadar pipeline

By Zafar Bhutta
Published: January 29, 2016

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STOCK IMAGE

ISLAMABAD: The Ministry of Finance appears to have spent the entire cess collection from gas consumers to bridge the budget deficit and is reluctant to provide $300 million to the petroleum ministry for executing the $2 billion Gwadar liquefied natural gas (LNG) pipeline project, an official says.

This came despite the Ministry of Petroleum and Natural Resources having approached the finance ministry to seek the release of gas infrastructure development cess (GIDC) collection for spending on planned gas import projects.
Govt seeks to negotiate Gwadar pipeline cost

The finance ministry instead suggested to borrow around Rs100 billion from commercial banks. Earlier, gas utilities were working on enhancing the capacity of their pipeline networks to create room for LNG transportation.

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So far, Rs183.86 billion has been received from consumers in shape of GIDC, which was imposed in January 2012 to finance gas import projects. However, nothing has been left as the finance ministry has consumed the entire amount.

For the Gwadar LNG pipeline, the government is negotiating a commercial deal with a Chinese company for kicking off work by the end of March.

The company, China Petroleum Pipeline Bureau selected by the Chinese government, will provide 85% of financing whereas Pakistan will inject 15% equity into the project.

The company is already working on pipeline projects stretching over 8,000 km in different countries including Myanmar, Bangladesh, Russia and other nations. It has also laid pipelines from Turkmenistan to China.
Gwadar-Nawabshah pipeline

However, the petroleum ministry is encountering trouble due to delay in release of $300 million as the project should be completed by the end of 2017.

“Owing to delay in financial assistance, we may not be able to finish work on the project by the stipulated time,” an official remarked. The finance ministry, according to the official, was of the view that the government was required to frame cess rules and before that it could not release the funds.

Now, the petroleum ministry has planned to send a summary to the Economic Coordination Committee (ECC) for the availability of necessary funds to finance the pipeline project.

According to officials, it is unfortunate that funds are available for metro bus projects but there is no money for pushing ahead with plans for gas import, which will contribute immensely to accelerating the pace of economic growth, which suffers a three-percentage-point loss every year due to energy shortages.

The Gwadar LNG pipeline is an alternative to the Iran-Pakistan gas pipeline project, which was stalled due to US sanctions on Tehran. The curbs have now been lifted and hopes arise that the project will be executed in the next two years.

Under the plan, the LNG pipeline will be laid from Gwadar to Nawabshah and a terminal will also be built at Gwadar port. The pipeline will be connected to the Iranian border at a cost of $200 million.
Gwadar-Nawabshah: Work on portion to end by December 2017

Engineering consultant ILF has put the total cost of the pipeline and terminal at around $2.5 billion because of a fall in steel and compressor prices.

“However, the Chinese company has offered to develop the project at a cost standing below $2 billion in the financial bid opened by Inter-State Gas Systems (ISGS),” a senior government official said, adding a price negotiation committee had been set up to push the cost further down.

However, the official cautioned that delay in the project would lead to an increase in the cost.
This is the first project under the China-Pakistan Economic Corridor for which technical and financial bids have been opened.
The Chinese firm will build the new terminal – a floating storage and re-gasification unit (FSRU) – which will be owned by ISGS. The terminal will have the capacity to handle 600 million cubic feet of imported LNG per day (mmcfd).
Published in The Express Tribune, January 29[SUP]th[/SUP], 2016.