Sinopec might join project to build North-South gas pipeline in Pakistan
MOSCOW. Nov 19 (Interfax) - LLC RT-Global Resources, a subsidiary of Russian state corporation Rostec, is in talks with Chinese partners on the possibility of cooperation on the project to build the North-South gas pipeline in Pakistan, the protocol from a November 16 meeting of the Russian-Chinese intergovernmental commission for energy cooperation states.
"The parties support LLC RT-Global Resources' discussion with potential Chinese contractors, including the corporation Sinopec, of the possibility of joint implementation of the project to build the gas pipeline in Pakistan," the protocol states.
Russia and Pakistan signed an intergovernmental agreement on the construction of the North-South gas pipeline from Karachi to Lahore in October. The route of the pipeline is now being surveyed and design and engineering work is underway.
The 1,100-km pipeline with capacity to carry up to 12.4 billion cubic meters of gas per year will connect the liquefied natural gas (LNG) terminal at the Karachi port in southern Pakistan to the city of Lahore in the northern part of the country.
The project will be carried out under a BOOT (Build Own Operate Transfer) arrangement. The pipeline will be owned and operated by the project company for 25 years. Over this period, investment will be recovered with the required return on equity through the gas transport tariff, after which the pipeline will be handed over to the government of Pakistan.
The pipeline is expected to be built in 42 months. The project will be implemented in three phases. The first, to be completed by the second quarter of 2018, will see the construction of the pipeline itself, and the second, with completion by the second quarter of 2019, will involve construction of some compressor stations. The third phase will see the launch of all compressor stations by the second quarter of 2020, bringing the pipeline up to full design capacity of 12.4 bcm per year.
The Pakistani customer and partner in the project is state gas company ISGS, which will pay for the gas transport services. The government of Pakistan will provide a sovereign guarantee for payment of the tariff and project financing.
The Russian side is considering raising money from Russian and Chinese development banks with the support of export credit agencies. RT-Global Resources will form a consortium that will include Russian and foreign investors, including Chinese and Pakistani, and potential Energy-Procurement-Construction contractors.
