Pakistan and Russia are Signing a $10 Billion Deal for Gas Pipeline

Pakistan and Russia are set to sign a landmark $10-billion gas pipeline deal. The deal is part of Russia’s vision to aggressively enter the South Asian energy market. Pakistan’s ambassador to Russia was authorized to sign a Memorandum of Understanding (MoU) with Moscow after the cabinet gave a go-ahead.

Russia currently exports huge quantities of gas to Europe and Turkey. This project is an alternate for Russia in case those exports go cold. Despite the US sanctions, Russia has been a major exporter of energy to Europe. However, it might change in the wake of the tensions in Crimea.

The Gas Pipeline

Gazprom – the Russian energy giant – will conduct a feasibility study to assess the final cost of the project. Gazprom was authorized by Russia to carry out the project and it also received clearance from Pakistani cabinet to conduct the analysis at its own cost and risk.

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Inter-State Gas Systems (ISGS) – already working on several gas import projects – was nominated by Pakistan to work on the pipeline with Gazprom.

ISGS is already working on a $10-billion gas pipeline project named TAPI. The pipeline will pass through Turkmenistan, Afghanistan, Pakistan, and India (TAPI), connecting South and Central Asia. The construction work on Pakistan’s phase of TAPI pipeline will start in March 2019.

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Russia is looking to gain a strong foothold in the emerging South Asian market as energy demands grow. The country already controls mega gas reservoirs in Iran. Russia will export the gas from there through Gwadar port to Pakistan and India.

The project will be a major breakthrough for Pakistan as it will not only connect several regions but will also help Pakistan meet its energy needs. According to reports, Russia will supply 500 million to 1.5 billion cubic feet of gas per day to Pakistan.

Pakistan has been facing a gas shortfall, especially during winters for quite some time now. Hopefully, the new pipeline will help bring that crisis down.