China set to initiate construction work on LNG pipeline

[Salman]

China set to initiate construction work on LNG pipeline

In a major and positive development, China Pipeline Petroleum Bureau (CPPB) is all set to initiate in the ongoing month of January 2017 the construction work on the mega project of $1.325 billion 700 km LNG pipeline to be laid down from Gwadar to Nawabshah, a senior official of the ministry of petroleum and natural resources told Pakistan Observer.
“The LNG pipeline project will be completed and operational by June 2018.”
Apart from it, two LNG terminals at Gwadar will also be constructed by the same Chinese company which will be part of the LNG pipeline. The two LNG terminals will be constructed at the cost of $350 million having the capacity to regasify the LNG of 1.2 billion cubic feet gas per day. “If the cost of the two LNG terminals is included then the whole cost of the project will stand at $1.675 billion,” the official said.
The project of two LNG terminals to be installed at Gwadar port will be forwarded to ECNEC for approval in coming days and the construction work on pipeline will be initiated in two weeks.
However, the pipeline will be having the capacity to transport 1.952 bcfd out of which Gwadar is to be provided 100 mmcfd gas in the first phase and when pipeline starts in-taking Iranian gas, then the port will also be provided gas of 150 mmcfd more. This is how, in toto, Gwadar will be injected 250 mmcfd gas from the pipeline.
Meanwhile, Ministry of Petroleum and Natural Resources (MoPNR) to this effect has put up the summary to ECC seeking the permission to sign the formal agreement with the Chinese company.
Incase ECC approves the summary, then formal agreement will be inked in the same week and the ground breaking of the project will get kicked within the month of January. The project will be completed and operational by June 2018.
The pipeline will be having the capacity to transport the gas of almost 2 Bcfd (billion cubic feet gas per day) and to this effect four compressors would be installed in the pipeline as against the earlier plan of three compressors. The pipeline will carry 1.2 bcfd gas from the two RLNG terminals to be operational by the time when the pipeline will be commissioned in June 2018 and 750 mmcfd gas from Iran when the pipeline will be extended back by 81 kilometers to Iranian border.
Both Pakistan and China in May 2016, had initialed an agreement to build 700 kilometers gas pipeline to be laid down from Gwadar to Nawabshah at the cost of $1.35 billion after Price Negotiation Committee (PNC) has finalized the cost of the project. And to this effect Inter-State Gas System (ISGS) on behalf of Pakistan and China National Petroleum Corporation (CNPC) on May 11, 2016 initialized the agreement.
The project will be constructed with 85 percent financing from Chinese Company and 15 percent from government of Pakistan, and the price at which the gas line will be laid down is much below from the estimated cost.
The price of the pipeline had been negotiated under government to government mode at very competitive price of $1.325 billion which is cheaper than the project of augmentation of gas network completed by both the gas companies—Sui Northern and Sui Southern.
Executive Committee of national Economic Council (ECNEC) has already accorded the approval to the LNG pipeline. The project will be completed under mode EPC-F (engineering, procurement, construction and financing).

Choudry Mujahid Yasin (CMY)
Lahore Real Estate
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