Pakistan Consider Reviving Russia's North-South Gas Pipeline Project, Starting from Gwadar

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Pakistan Consider Reviving Russia's North-South Gas Pipeline Project, Starting from Gwadar

Flag of Pakistan (© Shutterstock/A Kisel)
Flag of Pakistan (© Shutterstock/A Kisel)

Islamabad plans to shift the "starting point" of the long-delayed 'Pakistan Gas Stream Project' pipeline from Karachi to Gwadar, a decision that would help embark on the abandoned Gwadar Pipeline Project, connecting to Iran, the Tribune reported last week.

Formerly known as the North South gas pipeline project, the pipeline construction agreement was signed by Russia and Pakistan in 2015 to transport liquefied natural gas (LNG) from Karachi to Lahore.

The project was on a build, own, operate, transfer (BOOT) basis, which was to be transferred to Pakistan, with Moscow providing 85 percent of the funding, and Islamabad catering for the remaining 25 percent according to the initial model.

Pakistan and Russia's North South Gas Pipeline Project has faced challenges since its nomination in 2016. Initially, Russia nominated RT Global, but sanctions from the US left the project in limbo. Despite changing the project's structure several times, the two countries couldn't find a solution.

In 2021, they agreed for Pakistani state-owned gas companies to hold 74% of shares and Russian firms to own 26%, with Pakistan investing 74% of the funds.

However, the collection of funds from the Gas Infrastructure Development Cess has been held up by court orders, leaving the government considering two options: shifting the starting point of the pipeline from Karachi to Gwadar or shelving the 2021 agreement and renewing the initial model of giving the entire project to Russia to execute.

Currently, there's no LNG available for Pakistan, and the second terminal is running at a lower capacity due to the global market. State-owned Pakistan LNG Limited tried to strike a deal but was unsuccessful, resulting in a tough winter season for consumers.

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