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IP, Tapi projects: ECC panel to review progress tomorrow

The Economic Co-ordination Committee's subcommittee on two important proposed gas import projects-Turkmenistan-Afghanistan-Pakistan-India (TAPI), and Iran-Pakistan (IP)-is scheduled to review the progress on the projects' management strategy and other issues on December 22. The Minister for Petroleum and Natural Resources is scheduled to chair the meeting.

Sources told Business Recorder that the meeting would review important issues like finalisation of IP gas pipeline plan, appointment of its financial advisor, formal approval of its route, and final approval of gas sales purchase agreement of TAPI project. A detailed summary containing the overall project management strategy, project structure, financing etc and options for alternative routes through sea were tabled by ISGS/MPNR for policy guidelines.

"We are making all-out efforts to resolve the energy crisis in the country which has worsened due to shortage of natural gas thereby paralysing all major sectors of our economy including industrial sector, commercial, domestic, CNG," said an official of the Ministry of Petroleum.

"We are going to encourage local gas utility companies like Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines (SNGPL) to participate either on their own or in joint venture with international contractors in construction of these projects," he said. The government will reportedly select a leading Chinese bank as financial advisor of the IP gas pipeline.

Bilateral gas price discussions were held between Pakistan and Turkmenistan in Islamabad on October 25-26, 2011 and the two sides agreed on gas price, subject to approval by their respective authorities. The approximate length of the Pakistan segment of the IP gas pipeline is 781 km, from Iran-Pak border to Pakistan gas off-take point near Nawabshah, and it would cost $1.2 billion.

The 1680 km TAPI gas pipeline project aims to bring natural gas from the Yolotan/Osman and adjacent gas fields in Turkmenistan to Afghanistan, Pakistan and India at an estimated cost of $7.6 billion. The project will take 4 to 5 years to complete, after construction commences. Under the TAPI project, total 3.2 billion cubic feet of natural gas per day (BCFD) would be imported from Turkmenistan, of which Afghanistan's share is 500 mmcfd, Pakistan's 1,325 mmcfd, and India's 1,325 mmcfd.

Recognising that availability and affordability of energy is essential for sustainable economic growth, the government has devised a long-term energy security plan for meeting the country's energy needs up to the year 2030, and IP gas pipeline project is a key element of this plan. The project construction would take place on Engineering Procurement Construction Management (EPCM) approach whereby Inter-State Gas System (ISGS), would undertake the engineering and procurement activities and get the project constructed through multiple contractors. ILF Germany and Nespak are assisting ISGS as Engineering and Project Management Consultant in this regard.

ILF Germany and National Engineering Services Pakistan (Nespak) have recently completed the reconnaissance of the project route. Iran has an estimated 982 trillion cubic feet (TCF) of proven natural gas reserves, which are the world's second largest, after Russia. The most significant gas field in Iran is the offshore South Pars field, which is estimated to have 450 TCF proven natural gas reserves, around 40 percent of Iran's total proven natural gas reserves and 8 percent of the world's reserves. South Pars is nominated gas supply source for the IPI project.

Iran exports about 6-9 billion cubic metres gas annually (BCMA) to Turkey via a 2,500 km pipeline connecting the two countries. Iran also exports 1 BCMA gas to Armenia, and under the arrangement imports electricity. Iran and Armenia are in negotiations to gradually increase the volume to 2.3 BCMA.

Copyright Business Recorder, 2011