Pakistan and Russia made initial agreements for a $10-billion offshore gas pipeline, on Thursday.
The initiative was taken by Moscow to capture the energy market of Pakistan through an MoU for undertaking a feasibility study.
Inter State Gas Systems (ISGS) – a state-owned Pakistani company which handles gas import projects has been designated by Pakistan for executing the pipeline project in partnership with Russia’s energy giant Gazprom. Gazprom will further conduct feasibility studies and bear expenses in order to assess the economic viability and cost of the project.
ISGS is currently responsible for schemes like the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline which is planned to start in March 2019.
The offshore gas pipeline is said to meet the energy needs of industries set up in the SEZs along the CPEC route. This is crucial as CPEC has now entered the industrialization phase of development.
This move will also alleviate the gas crises which is worsened in the winter months. In an effort to quell the crises, the previous government began LNG imports under a 15-year agreement from Qatar as local deposits are depleted.
The move is said to bring the two countries closer strategically and give Russia access to a largely untapped market. With the crises in Ukraine still weighing on Russia’s interests, Pakistan presents an alternative and lucrative market for the rising energy demands in South Asia.
Previously, Russia has been a major gas exporter to EU countries and Turkey. In 2017, Russian gas exports reached an all-time high of 621.8 million cubic meters daily from Europe to Turkey.