Pakistan's Law Ministry Clears Russia Backed Gas Pipeline

Pakistan’s law ministry has cleared the way for the award of $2 billion LNG pipeline contract to a Russian firm, The Pakistan Tribune reported Friday.

In October 2015, Moscow and Islamabad signed an intergovernmental agreement on the construction of the pipeline. In December 2014, Rostec announced that its subsidiary, RT Global Resources, would be building oil and LNG pipelines and terminals in Pakistan.

However, the company is on the sanctions list – a concern for Pakistan. Russian President Vladimir Putin was due to visit Pakistan to perform the ground-breaking of the project, but the signing of a commercial contract between RT Global Resources and Interstate Gas Systems was delayed due to US curbs on the company, The Express Tribune added.

Russia has proposed a Pakistan registered special purpose vehicle (SPV) that would address the issue of sanctions. The Economic Coordination Committee (ECC) had directed the law ministry to give legal opinion.

The law ministry has now agreed that the Russian proposal was workable and would help execute the pipeline project. There was no legal bar on awarding commercial contract to the Russian firm that would set up an SPV in Pakistan, the law ministry stated.

Officials said the SPV would also be listed on the Pakistan stock market to float its shares for generating funds.

The proposed pipeline will be 1,100km long and will have the capacity to carry 12.4 billion cubic metres of LNG per annum.