Russia Eyes LNG Sales to Pakistan

Russia's prime minister Dmitry Medvedev has told the energy ministry to negotiate with Pakistan on the supply of LNG and conclude a three-year contract with the possibility of an extension, the government website said October 6. The talks will be between state giant Gazprom and state Pakistan LNG, but no volume was specified.

In October 2015, the energy ministers signed a $2.5bn deal to build a 1,100-km, 12.4bn m³/yr pipeline by the end of 2017 to carry gas from Karachi to Lahore, the North-South Pipeline. Russia agreed to lend $2bn against a 25-year contract, but the project never progressed.

Russia plans to export 9.9mn mt/yr in 2017 and the volume is projected to double to 20.8mn mt/yr in 2020 by which time Yamal LNG will be on line. Last year, about 68% of Russian LNG went Japan, 17% to South Korea and 12% to Taiwan. China’s share was a little more than 2%, according to BP.

Pakistan imported 3mn mt LNG last year, mostly from Qatar; but its petroleum minister Shahid Abbasi told Reuters in July that the volume will be 4.5mn mt this year and it is projected to reach 30mn mt/yr by 2022, in which case it will be among the top five biggest LNG markets in the world.

The government report says that “according to Pakistani legislation, execution of the governmental draft agreement is a necessary condition for the parties’ designated organisations to sign commercial contracts on LNG supplies without holding tenders, as stipulated by the policy adopted by Islamabad. The agreement will remain in force for three years and will be automatically renewed for successive periods of three years upon the expiry of the initial and subsequent periods.”

Dalga Khatinoglu, Ilham Shaban