News / Asia

    Pakistan Anticipates Putin Visit to Seal Pipeline Deal

    FILE - Men carry jerry cans as they walk along a pipeline in Karachi, Pakistan, on May 2014.
    FILE - Men carry jerry cans as they walk along a pipeline in Karachi, Pakistan, on May 2014.
    Ayesha Tanzeem

    Russian President Vladimir Putin is expected to visit Pakistan in the coming months to inaugurate a gas pipeline project in which Russia will investing billions of dollars.

    Pakistan’s Prime Minister Nawaz Sharif already has sent an invitation and Russia has shown willingness to send its head of state, according to Mobin Saulat, the CEO and managing director of Inter State Gas Systems, the Pakistani company handling the project.
     
    “Maybe before June,” Saulat said hopefully, referring to Putin's arrival.
     
    Saulat attributed Russian interest in this project to changing regional dynamics, both political and economic.
     
    “We are 200 million people. And we provide a gateway to other South Asian countries,” he said.

    Energy officials meet
     
    As a sign of Russian interest, he pointed out that Pakistani officials and energy experts, on a recent Moscow trip, were able to meet the heads of Russian energy giants Gazprom, Rostec, and Rosneft for the first time in more than two decades.
     
    Russia also wants to supply liquid natural gas to Pakistan. Saulat said in time Pakistan should expect to import 4 million tons per annum of LNG from Russia. Pakistan recently signed a deal with Qatar to provide a similar amount.  
     
    Economic incentives apart, both sides might have strategic and political motives for working together on this project.
     
    Pakistan has been trying to form new regional partnerships to diversify from its heavy reliance on the U.S. and China. Russia likely views the deal as an opportunity to expand its influence in key areas of South and Central Asia.
     
    “There’s a great deal of thinking that this has more geopolitical underpinnings rather than commercial ones,” said Khurram Hussain, a business and economy journalist, and a former Pakistan scholar at Washington-based think tank Woodrow Wilson Center.
     
    He sounded doubts, however, about the pace of the project.
     
    “I take agreements that have been signed in a veil of secrecy with a great deal of skepticism,” said Hussain, adding that if the government wanted to start the project in a few months, now would be the time to let analysts review the terms and conditions.

    FILE - A worker carries a cylinder of Liquified Petroleum Gas at a gas distribution center in Peshawar, Pakistan April 29, 2015.
    FILE - A worker carries a cylinder of Liquified Petroleum Gas at a gas distribution center in Peshawar, Pakistan April 29, 2015.



    Boosting Pakistan's economy
     
    He acknowledged that the deal, if it goes through, would be good for Pakistan.
     
    “Pakistan is in dire need for foreign investment in infrastructure and the only parties that are willing to step forward thus far have been other states, particularly China,” he said.
     
    While the current venture is a state-to-state project, it might give a signal to the private sector that Pakistan’s economy has powerful backers.
     
    Russia will spend from $2 billion to $2.5 billion, which is almost 85 percent of the cost of building the pipeline.
     
    The 1,100-kilometer-long structure will be able to transport 1.2 billion cubic feet of gas per day throughout Pakistan, from Karachi to Lahore. The first phase of the three-phase project is expected to come online in two years, with the final completion date scheduled for some time in 2019. LNG, from any country that comes to Karachi port will be re-gasified and sent through this pipeline to the north.
     
    In time, the pipeline will help replace the aging infrastructure currently used to transport gas within Pakistan.

    Russian involvement
     
    Pakistan initially approached China, Russia, and Qatar for the financing of the project and received favorable responses from all. In the end, the government opted for Russia in order to diversify its regional partnerships.
     
    Saulat said the Russians “immediately responded.” Russia already has sent teams to survey the route and is in the process of designing the project.
     
    Russian Energy Minister Alexander Novak and his Pakistani counterpart Shahid Khaqan Abbasi signed the agreement when Novak visited Islamabad in October.
     
    Saulat expects the deal to usher in a new era of Russian investment in Pakistan. “In the next few months you’ll see more and more Russian delegations coming in,” he said.

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    Comment Sorting
    Comments
         
    by: Marcus Aurelius II from: NJ USA
    February 15, 2016 4:21 PM
    Pakistan's government can seal any deal it likes. That will not stop extremists from blowing it up as fast as it can be repaired. This is one of the many fatal flaws in this kind of deal and similar projects like China's silk road. However, not only are the projects themselves physically vulnerable, the customers are broke. They'll be lucky to pay $30 a barrel for oil let alone $100.
    In Response

    by: Marcus Aurelius II from: NJ USA
    February 16, 2016 10:38 PM
    Nasir, I'm sitting here safe and sound in my house in rural New Jersey (born and raised in New York City) while you're in Pakistan and you say I'm the stupid one?

    To build a pipeline from Russia to Pakistan has to either cross through the Caucuses and Iran, through the former Central Asian SSRs and Afghanistan, or through Western China. There are lots of people on all those routes who'd be only too happy to do anything they could within their power to hurt Russia. What will Russia do, provide armed guards along the entire route 24 hours a day forever? How much more will it cost to build, protect, maintain, and repair the pipeline than they get for the fuel they are shipping? Looks like a really dumb investment to me.
    In Response

    by: Tariq Shah from: United States
    February 15, 2016 11:50 PM
    Hey Indian IT Coolie, at least be man enough to use your real name, Kumar or whatever it is. Dont worry about terrorism, both sides know what needs to be done, its not hard to repair a busted pipe, the locals will get needed jobs and move away from terrorism recruits, as for the price of oil, its less than $25 and dropping, lol....keep burning in jealousy.
    In Response

    by: Nasir from: Islamabad, Pakistan
    February 15, 2016 11:48 PM
    I am not surprised on the outright stupid comments that have been made above since Intelligence Quotient in the US, too, is declining as rapidly as the price of Oil.

    A scholar once said, "Do not comment on issues you have no command off and have not seen, if not heard, first hand."

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