ISLAMABAD: The $45-billion worth of agreements signed by Pakistan and China earlier this month included a multibillion-dollar LNG pipeline and terminal deal, which will work as an alternative to the troubled gas import project with Iran as the pipeline will be extended to the Gulf state after international sanctions are lifted.
“The agreement was signed during Prime Minister Nawaz Sharif’s visit to China. It is a state-to-state deal and no bidding will be held for the award of contract,” an official told The Express Tribune.
According to initial estimates, the project is expected to cost $3 billion – $1 billion will be needed to lay the pipeline from Gwadar and over $2 billion will be required to construct the terminal with liquefied natural gas (LNG) handling and re-gasification facilities and to develop large storages.
China will meet 85% of the financing needs for constructing the LNG pipeline from Gwadar Port to Nawabshah.
The Ministry of Petroleum and Natural Resources is seeking the support of economic decision-makers for relaxing the Public Procurement Regulatory Authority (PPRA) rules.
“The ministry will approach the Economic Coordination Committee (ECC) to win its approval for easing PPRA rules,” the official said. “This will clear the way for direct award of a lucrative contract to a Chinese state-owned company.”
This will be the second LNG terminal in the country as a fast-track terminal is already being built by Elengy Terminal Pakistan Limited (ETPL) at the Port Qasim, which is likely to be completed in February next year.
The LNG pipeline will be extended from Gwadar to Iran for gas import when sanctions on Tehran are lifted. Its capacity will be one billion cubic feet per day.
The pipeline will have the same specifications that were proposed for the Iran-Pakistan gas pipeline including a diameter of 42 inches.
According to officials, since Pakistan has not been able to lay a 781km pipeline from the Iranian border to Nawabshah because of its failure to tap foreign finances, it has decided to build the pipeline from Gwadar to Nawabshah in partnership with China.
This will transport at least 500 million cubic feet of gas per day (mmcfd) after re-gasification of imported LNG.
Hopes were high as the US and Iran were engaged in crucial negotiations to settle the dispute over Tehran’s nuclear programme with a strong possibility that they would reach a compromise, officials say.
The economic decision-makers have already made their mind that before the curbs are removed they will not push ahead with the gas pipeline project with Iran to avoid its repercussions for Pakistani companies.
The terminal planned at the Gwadar Port will have the capacity to handle 690 mmcfd of LNG. Apart from this, large storages will be constructed at the port from where the LNG, after re-gasification, will be transported to Nawabshah, where it will be injected into the national gas network.
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