Islamabad - Pakistan and Russia on Thursday signed a memorandum of understanding (MoU) to conduct feasibility study of building US$10 billion offshore gas pipeline project to cater the energy needs of special economic zones (SEZs) of CPEC.

The memorandum of understanding (MoU) was signed in Moscow. Additional Secretary Ministry of Energy and Petroleum Division Sher Afgan, on behalf of Pakistan government and Deputy Prime Minister Anatoly Yanovsky on behalf of government of Russia singed the MoU to conduct feasibility study to build multibillion dollars offshore gas pipeline.

Managing Director Mobin Saulat of Interstate Gas Systems (ISGS), a state owned company with a mandate to build pipelines, also witnessed the signing ceremony.  On the occasion, the two sides expressed interest to enhance bilateral relations in energy sector. The pipeline project will provide an opportunity to Russia to capture the energy market of Pakistan.

Inter State Gas Systems (ISGS) – a state-owned Pakistani company established to handle gas import projects and is already working on schemes like Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline – has been designated by Pakistan for executing the pipeline project along with Russia’s energy giant Gazprom. Russian energy giant Gazprom would conduct the feasibility study on its own expenses to assess economic viability and cost of the project.

China-Pakistan Economic Corridor (CPEC) has now entered the industrialization phase and needs gas for duty and tax-free special economic zones (SEZs). The offshore gas pipeline will meet energy needs of industries being set up in the economic zones along CPEC route.

The pipeline will connect Pakistan and Russia and act as an energy corridor between the two countries. Strategically, it is a very important project as the two countries will come closer to each other and at the same time, Pakistan will gain access to the Russian market in order to boost its overall exports.

Russia has nominated Public Joint Stock Company Gazprom for implementation on the project. Pakistan’s cabinet has permitted the company to conduct the feasibility study at its own cost and risk.

It is pertinent to mention here that Pakistan is also working on the $10-billion Tapi gas pipeline which will connect South and Central Asia. Construction work on the scheme in Pakistan is planned to start in March 2019.