Investment JV Rostec and ISGS in a gas pipeline in Pakistan will reach $2 billion

Moscow. October 16. A joint venture of Rostec and Pakistani ISGS invests in the construction of the gas pipeline “North – South” in Pakistan, $2 billion, told journalists the Minister of energy Alexander Novak.

As previously reported, Russia and Pakistan signed an intergovernmental agreement on construction of gas pipeline “North – South” from Karachi to Lahore. The project will be implemented by the Russian company “RT Global Resources”, a member of the state Corporation rostec. At the moment we are surveying for the pipeline route and engineering / design work.

The pipeline length of 1100 km with a capacity of up to 12.4 billion cubic meters per year will connect terminals for liquefied natural gas (LNG) in the port city of Karachi in southern Pakistan city of Lahore in the North of the country.

The project will be implemented under the scheme BOOT (Build Own Operate Transfer). The constructed pipeline will be owned and operated by the project company for 25 years. During this period at the expense of the tariff for pumping gas is expected to make a return investment with the required return on equity, after which the pipeline will be transferred to the government of Pakistan.

The gas pipeline from Karachi to Lahore is the first in a long time, a joint project between Russia and Pakistan, implemented on the basis of intergovernmental agreements.

The construction time of the pipeline is 42 months. The project will be implemented in three stages. In the first stage, by the second quarter of 2018, will build the pipeline. In the second stage, by the second quarter of 2019 is a part of compressor stations. In the third stage, by the second quarter of 2020, will be put into operation, all compressor stations, and as a result, the pipeline will reach full design capacity of 12.4 billion cubic meters per year.

A customer partner with the Pakistani side, there is a State-owned company Pakistan – ISGS, which is engaged in gas supply, and will also pay for the transportation of gas. The government of Pakistan, in turn, will issue a sovereign guarantee for the payment of tariff, and project financing.

The Russian side is considering the possibility of borrowing from the Russian and Chinese development banks supported by the export credit agencies. “RT Global Resources” will create a consortium, which will include Russian and foreign investors, including Chinese, Pakistani, as well as the potential construction (EPC) contractors.