Medvedev Instructs Ministry of Energy to Conclude LNG Agreement with Pakistan

Russian liquefied natural gas (LNG) is increasingly entering the world market, with Russian Prime Minister Dmitry Medvedev now having instructed the Ministry of Energy to prepare and sign an agreement with the Pakistani authorities on the supply of LNG.

The intergovernmental agreement will be concluded for three years with automatic prolongation for the same period, the number of prolongations thereafter unlimited- a necessary detail for the Pakistani authorized company to conclude a long-term contract with Gazprom without conducting a tender.

The company-buyer of Russian LNG will become state holder ‘Pakistan LNG Ltd.’ and coordinators of the implementation of the agreement will be the Ministry of Energy of the Russian Federation and the Ministry of Energy of Pakistan. Volumes of purchases of liquefied gas are not specified in the instruction, but most likely, they will be significant.

As Pakistan is currently experiencing an acute shortage of energy resources, the potential demand for natural gas is twice the supply. That is why the implementation of projects for the construction of terminals for regasification of LNG and the network of trunk gas pipelines has become a strategic priority for the economy of Pakistan over the next few years.

At the same time, the implementation of the North-South gas pipeline project, which the state corporation Rostek is supposed to build, cannot begin in the country as, although the design is almost complete, the parties still cannot agree on tariffs for pumping. The Russian side does not like them because they do not allow a return of investments put into the project.

The 12.4 billion cubic meter gas pipeline is intended to connect regasification terminals in the ports of Karachi and Gwadar in southern Pakistan with power plants and industrial consumers in Lahore in the north of the country.

Dimitri Dolaberidze