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Russia will lend Pakistan $2b for LNG pipeline

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ISLAMABAD: Pakistan and Russia have tied up a contract under which Moscow will lend Islamabad $2 billion to set a pipeline that will supply liquefied natural gas (LNG) form Karachi to Lahore. In return to this, Russian companies will be given contract to contract the pipeline.

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The formal concord between the two nations is likely to be signed next month, following which Pakistan will sign a commercial contract with a Russian agency that Moscow will recognize as its preferred contractor to construct the 1,000-kilometre pipeline. In the light of the agreement, the contract will be given without any formal bidding procedure.

The financing for the LNG pipeline comes as a prelude to Russia’s proposal to sell LNG to Pakistan. Russian sole has the second-largest reserves of natural gas in the world, and is looking for to expand its export markets after a spat last year with the European Union, its major buyer, over Ukraine.

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Petroleum Minister Shahid Khaqan Abbasi told media representatives, ‘Pakistan and Russia have finalised an LNG pipeline deal in a recent meeting in Moscow and the two countries will sign a government-to-government basis deal next month. Russia will start its first LNG exports in 2016 and has also offered to sell gas to Pakistan.’

Right now, Pakistan is working on two pipelines to convey re-gassified LNG from Karachi to the northern parts of the country. The first is a pipeline that will put together the Gwadar Port to the main natural gas pipeline centre in Nawabshah. The other one will put down direct pipeline from Karachi to Lahore.

Meanwhile, Pakistan’s available pipeline network bears the capacity to transport 320 million cubic feet of gas per day in re-gassified LNG. Usage in Punjab and Khyber-Pakhtunkhwa along with upper Sindh surpasses 3,000 mmcfd, resulting in an inevitable need of a new pipeline.

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