Pakistan and Gazprom sign MoU

[Naveed Yaseen]

ISLAMABAD (May 29 2009): Pakistan and Gazprom, the largest extractor of natural gas in the world and largest Russian company, have signed a Memorandum of Understanding (MoU) for laying the 950 km gas pipeline under the Iran-Pakistan-India (IPI) project. Pakistan and Iran have recently finalised the draft of Gas Sales Purchase Agreement (GSPA) and are close to signing the deal.

Work on the IPI gas pipeline project is scheduled to commence in September 2009 and completed in four years. "Gazprom and Pakistan have already signed the MoU to carry out the project," sources in Petroleum Ministry revealed to the Business Recorder.

A pre-feasibility study of the IPI project was undertaken in 2006; to further develop the project, a bankable feasibility study as well as Front End Engineering Design (FEED) will be undertaken that would enable the project managers to approach prospective investors and financiers. Sources said that a Pakistani company would undertake feasibility study and design.

The country is facing a massive power shortage, which has led to widespread load shedding across the country. As many as 48 percent of thermal power generation is based on furnace oil of which 62 percent was imported costing over $2 billion in financial year 2007-08. Official sources said that gas imported from Iran would be utilised mainly for power generation that would be 25 percent cheaper as compared to the power generated through furnace oil. Pakistan has made a commitment to Iran to import minimum 750 million cubic feet gas per day and maximum one billion cubic feet gas per day.

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