IP gas pipeline feasibility study: Pakistan may award contract to German firm

[LahoreEstate]

ZAFAR BHUTTA
ISLAMABAD (November 01 2009): Pakistan may award a contract to Germany-based ILF Consulting Engineers to conduct a bankable feasibility study and engineering design of Iran-Pakistan (IP) gas pipeline. ILF will work in joint venture with Pakistan engineering consultancy agency National Engineering Services Pakistan Limited (Nespak).

A pre-feasibility study has been undertaken on the IP gas pipeline project and a bankable feasibility study and Front End Engineering Design (FEED) is required to approach investors and financiers and for tendering and procurement of materials, equipment and appointment of construction contractors.

Sources told Business Recorder that a delegation of ILF consultants is in Pakistan at present to finalise the terms and conditions of the contract. Germany-based ILF consultant provides consultancy with regard to tunnelling, underground construction, pipeline engineering, feasibility studies, social and environmental impact and detailed design.

Petroleum Ministry has estimated $22 million to work on Stage One (preparatory phase), which includes bankable feasibility study, social and environmental impact assessment (SEIA), supervision of detail route survey (GRS) and FEED. Sources said that bankable feasibility study would require $10 million to $12 million. The government will initially arrange around $12 million financing through National Bank of Pakistan (NBP) to conduct a bankable feasibility study of IP gas pipeline project.

Finance Ministry has assured arrangement of financing in this regard. Pakistan has already agreed to import 750 mmcfd gas and would seek additional 250 mmcfd gas from Iran on the request of Balochistan government to meet the requirement of Gwador Port. "If ECC gave the nod for additional gas import from Iran, then the size of the pipeline would be increased and Pakistan will have to take up the issue of the size with Iran", sources said.

After increasing the volume of gas import, the size of the pipeline may have to be increased to 48 inches, sources said. The cost of construction of 42-inch pipeline--from Iran to Nawabshah--was estimated at $1.2 billion. However, with increase in the size the cost would rise.

At present, 48 percent thermal power generation is based on furnace oil, out of which about 62 percent is imported. One bcfd gas will generate an estimated 5,000 mw electricity that would result in massive relief in load shedding to Pakistan's electricity consumers.

Recent studies have shown imported gas would be most economical as compared with other imported fuels. According to analysis, thermal power cost would be 3.51 cents/kwh from Iranian gas if the crude oil price stood at $40 per barrel, whereas the furnace based power generation would cost 4.24 cents/kwh, LNG 3.51 cents/kwh, coal 4.3 cents/kwh and solar 11 cents/kwh

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