ISLAMABAD: Pakistan is exploring options to finalize a multi-billion-dollar liquefied natural gas (LNG) pipeline deal with Russia, aiming to meet its urgent energy needs. This deal, however, hinges on Pakistan finding a way to avoid US sanctions.
In a significant meeting at the recent SCO summit, Russian President Vladimir Putin proposed to Prime Minister Shehbaz Sharif the construction of an LNG pipeline running from Russia through Iran to Pakistan, and potentially extending to India. Minister for Petroleum Musadik Malik has been tasked with conducting a feasibility study, factoring in the sanctions imposed by the US on Russia and Iran, as confirmed by top official sources on Wednesday.
Currently, Pakistan-Russia bilateral trade stands at $800-$900 million annually. There are ambitious plans to increase this figure to $20-$25 billion per annum by leveraging regional and global opportunities. Following the Russia-Ukraine conflict, Russia has been seeking new markets, including South Asia, as its trade with European countries declined by 70%.
Several routes are being evaluated to realize this project. Historically, regional energy connectivity initiatives, including power and gas, have not materialized despite substantial promotion. The feasibility of importing LNG from Russia via Iran to Pakistan and India is under consideration, with the aim of avoiding antagonizing the US.
Pakistan is also looking to strengthen trade ties with Azerbaijan, whose president is scheduled to visit Islamabad. Currently, Pakistan exports $7 million worth of goods to Azerbaijan annually, with imports standing at $14 million. The Ministry of Commerce has prepared an ambitious plan to boost annual exports to over $1 billion.
In 2015, Pakistan and Russia agreed to construct a 1,100-kilometer pipeline to deliver imported LNG from Karachi to power plants in Punjab, with an annual capacity of 12.4 billion cubic meters (bcm), potentially increasing to 16 bcm.
Pakistan aims to finalize the Russian LNG project while maintaining favorable relations with the US, exploring options to replicate Turkey’s experience of striking commercial agreements without adverse impacts from US sanctions. Additionally, Pakistan seeks multi-billion-dollar deals with Russia and China and is negotiating with the IMF for a deal within the month.
Story by Mehtab Haider
