ISLAMABAD - Pakistan has issued tender for laying Iran-Pakistan (IP) gas pipeline in its territory to a German company, an official said.

According to the secretary petroleum, Pakistan has offered $250 million to a German company, ILF Engineering, for laying the gas pipeline inside its territory. The gas pipeline would be completed till 2014, the secretary added.

APP adds: Pakistan is likely to complete a detailed route survey for laying the gas pipeline from Iranian border close to the Makran Costal Highway to its `off-take point’ at Nawabshah in the current month, covering a distance of over 781 kilometre.

“Work on a Detailed Route Survey (DRS), Social and Environmental Impact Assessment (SEIA) and land acquisition has already been started. Route Reconnaissance Survey - a part of DRS – was completed at the end of July 2011. While, DRS activity is expected to be completed in March 2012,” official sources in the Ministry of Petroleum and Natural Resources told APP.

Pinning high hopes with the gas pipeline project, the sources termed it `hallmark’ of the government, which would help bridging the projected gas shortfall in the country.

Both the countries had signed the Intergovernmental Framework Declaration (IGFD) in May, 2009 for early implementation on the project conceived in early nineties.

Subsequently, respective commercial entities Inter State Gas Systems Limited (ISGS) from Pakistan side and National Iranian Oil Company (NIOC) from Iranian side entered into the Gas Sale and Purchase Agreement (GSPA) on June 5, 2009.

Following which, a detailed analysis was undertaken to evaluate the economics of importing Iranian gas, at the revised price with alternative fuels (HSFO and LNG) for power generation.

It determined that imported natural gas even at the revised price remains the cheapest and most suitable fuel for power generation.

The pipeline of 56-inch diameter will cover around 1931-Kilometer distance starting from Iran’s South Pars gas field.

The sources said the project was being implemented on a segmented approach whereby each country would be responsible for construction of pipeline in the respective territory.

The pipeline will start from the onshore gas processing facility at Assaluyeh in Iran, to traverse a distance of 1,150 km up to the Iran-Pakistan border, which will be built and operated by Iran.

“Iran has already completed a 900-km portion of 56-inch diameter pipeline from Assaluyeh to Iran Shehr. The remaining 200 km up to the Pakistan border is under design, and is expected to be completed in two years time,” the sources added.

The project implementation and construction is targeted in four years and the first gas flow will be available by the end of December 2014. The 750 mmcfd gas volume will help generate around 4,000 MW electricity and provide more job opportunities in backward areas of Balochistan and Sindh.

“As per GOP international commitments to this project of national strategic importance, a performance guarantee has been provided by Pakistan to Iranian government assuring implementation of the project as per agreed timelines,” the sources said.

Pakistan has appointed the Engineering and Project Management (E&PM) consultant in April 2011 that has completed the Interim Front End Engineering Design (FEED) and Interim Bankable Feasibility Study.

They said ‘Line Pipe’ tendering was currently under process, which would be followed by Pre-Qualification activities of Compressor Stations.

Pakistan has already completed the process of appointing Financial Advisory Services (Equity and Debt arranger) for the project. Accordingly, a contract has been signed on January 6 this year with JV of Habib Bank Limited, Ernst and Young and Industrial Commercial Bank of China as Financial Advisor.