Pakistan, India agree to 7.23 billion dollars gas pipeline

Article from Dawn...
By Khaleeq Kiani


ISLAMABAD, March 8: Iran, Pakistan and India plan to start laying a $7.23 billion gas pipeline by September 2009 on a segmented basis to ward off possible US sanctions aimed at punishing oil companies dealing with Iran.

Each country will build the pipeline in its territory and Iran “has already started laying pipeline from Assaluyeh to Iran Shehr” to serve its eastern areas that would be extended by about 200 kilometres to Pakistan border, a senior official in the petroleum ministry told Dawn.

He said a tentative schedule for the pipeline’s implementation had also been agreed upon, envisaging completion of the project between June-September in 2014.

He, however, said that Pakistan would build the 655-kilomter pipeline in its territory through private sector on ‘build, own, operate and transfer’ (BOOT) basis, adding that a lead sponsor would be appointed immediately after signing the gas sales and purchase agreement with the National Iranian Gas Company (NIGC) by June 2007.

The lead sponsor will set up a special purpose pipeline company to undertake detailed feasibility study and make various arrangements to transport imported gas. The federal government or its controlled entities would take at least 10 per cent equity in the pipeline company.

Based on steel cost of $960 per ton (which may vary later), the 1,092-kilometre Iranian segment would cost $3.99 billion, while $2.64 billion would be needed for the 655-km segment in Pakistan. The 344-km-long Indian segment would cost $600 million.

The official said there would be two pipelines of 56-inch-diametre (class 600X-70) for the project – one delivering 2.1 billion cubic feet per day (BCFD) to Pakistan and the other that will take about 3.2 BFCD to India. Iran has about 944 trillion cubic feet (TCF) proven gas reserves.

Pakistan and Iran have already signed a term sheet for supply of 2.1 BCFD gas for 30 years that could be increased to 2.8 BCFD at a later stage.

The official said the pipeline route was expected to be finalised in a few days by the National Engineering Services of Pakistan (Nespak) and then gas sales and purchase contract (GSPC), joint declaration and inter-governmental framework agreements would be signed before December 2008.

Pakistan is targeting to complete acquisition of right of way for the project by June 2010 and finalise financing arrangements by April 2009. Similarly, the construction Pakistan part of the pipeline is expected to start in September 2009 and complete in September 2011. The testing and commissioning phase is expected be completed by March 2014 and first flow of gas is expected in June 2014.