Thursday, July 8, 2010

Pakistan-Iran pipeline....

Pakistan to construct 780-km, 42 inch diameter pipeline....

KARACHI: Pakistan will construct about 780-km, 42” diameter pipeline from the border, traversing along the Makran Coastal Highway to connect with its existing gas transmission network at Nawabshah, said Naim Sharafat, MD, Interstate Gas Systems (Pvt) Ltd (ISGS) here on Wednesday.

Briefing the Senate Standing Committee for Petroleum and Natural Resources about the status of the Iran-Pakistan Pipeline project, he said almost 665-km of the pipeline will pass through Baluchistan while about 115-km of the pipeline will be laid in the Sindh province, he said.

This was the first Senate Committee meeting held at SSGC since Iran and Pakistan inked the historic agreement in Tehran in June 2010 for the supply of natural gas to Pakistan from 2015.

The meeting was chaired by Sabir Ali Baloch, the Standing Committee Chairman. Naim Sharafat, MD, ISGS who was accompanied by his CFO Mobin Saulat dilated on the salient features of the 1,150 km pipeline, which will connect Iran’s South Pars gas field with Baluchistan and Sindh provinces.

The estimated cost of Pakistan segment is $1.2 billion to be incurred over a 4-year period, Mr. Sharafat added.

He further explained the project is planned to be funded at a debt-equity ratio of 70:30 requiring an equity investment of $373 million and debt financing of $872 million. Mr Sharafat said the project’s debt portion is expected to be secured from a combination of domestic and international financiers including Sindh and Baluchistan governments, SSGC, SNGPL, OGDCL, PPL, PARCO and NBP (whose contribution will be $190 million or 51% of equity structure) as well as potential private investors including Petronas and Gazprom (whose contribution will be $183 million or 49% of the equity structure). MD, ISGS stated that under the Gas Sale and Purchase Agreement (GSPA), Pakistan will import 750 mmcfd gas with a provision to increase it to one billion cubic feet a day (bcfd).

The senators suggested that the stakeholders in the routes traversing the pipeline must be taken into confidence, majority of which are remote and less developed areas, with clear-cut assurances for the provision of new schools, hospitals and vocational training centers. In response to the senators’ queries, MD, ISGS said that being one of the largest infrastructure projects the country has ever seen, the IP project will create new job opportunities in the provinces of Baluchistan and Sindh, thus improving the income level and the standard of living of its citizens.

In response to the senators’ apprehensions, Mr. Sharafat stated that Iran-Pakistan Project’s GSPA was broad enough to allow force majeure relief in the event the project is hampered due to UN sanctions on Iran. MD, ISGS said that in case the project does not materialize, an LNG terminal will be set up in Gwadar to allow re-gasified LNG to the system.

Explaining the current status of the project, MD, ISGS said that a detailed route survey was in progress to pave way for the engineering and design of the pipeline facilities....

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