Senate Standing Committee for Petroleum and Natural Resources meeting at SSGC HO Karachi: July 7, 2010 (PR): The Senate Standing Committee for Petroleum and Natural Resources was given a comprehensive presentation on the status of the Iran-Pakistan Pipeline project by the officials of Interstate Gas Systems (Pvt.) Ltd. This was the first Senate Committee meeting held at SSGC since Iran and Pakistan inked the historic agreement in Tehran in June 2010 for the supply of natural gas to Pakistan from 2015.
The meeting was chaired by Sabir Ali Baloch, the Standing Committee Chairman. Naim Sharafat, MD, ISGS who was accompanied by his CFO Mobin Saulat dilated on the salient features of the 1,150 km pipeline which will connect Iran's South Pars gas field with Balochistan and Sindh provinces. Kamran Lashari, Secretary, Ministry of Petroleum and Natural Resources also participated in the meeting. Committee members Jehangir Badar, Abbas Khan Afridi, Dr. Muhammad Ismail Buledi, Dr. Safdar Ali Abbasi, Mir Mohabat Khan Marri, Nawabzada Muhammad Akbar Magsi and Pervaiz Rashid also took part in the proceedings.
Mr. Sharafat explained to the senators that Pakistan will construct about 780-km, 42” diameter pipeline from the border, traversing along the Makran Coastal Highway to connect with its existing gas transmission network at Nawabshah. Almost 665-km of the pipeline will pass through Balochistan while about 115-km of the pipeline will be laid in the Sindh province, he said.
The estimated cost of Pakistan segment is US$ 1.2billion to be incurred over a 4-year period, Mr. Sharafat added. He further explained that the project is planned to be funded at a debt-equity ratio of 70:30 requiring an equity investment of US$373 million and debt financing of US$872 million. Mr. Sharafat said that the project's debt portion is expected to be secured from a combination of domestic and international financiers including Sindh and Balochistan governments, SSGC, SNGPL, OGDCL, PPL, PARCO and NBP (whose contribution will be US$190 million or 51% of equity structure) as well as potential private investors including Petronas and Gazprom (whose contribution will be US$183 million or 49% of the equity structure). MD, ISGS stated that under the Gas Sale and Purchase Agreement (GSPA), Pakistan will import 750 mmcfd gas with a provision to increase it to one billion cubic feet a day (bcfd).
The senators suggested that the stakeholders in the routes traversing the pipeline must be taken into confidence, majority of which are remote and less developed areas, with clear-cut assurances for the provision of new schools, hospitals and vocational training centres. In response to the senators' queries, MD, ISGS said that being one of the largest infrastructure projects the country has ever seen, the IP project will create new job opportunities in the provinces of Balochistan and Sindh, thus improving the income level and the standard of living of its citizens.
In response to the senators' apprehensions, Mr. Sharafat stated that Iran-Pakistan Project's GSPA was broad enough to allow force majeure relief in the event the project is hampered due to UN sanctions on Iran. MD, ISGS said that in case the project does not materialize, an LNG terminal will be set up in Gwadar to allow re-gasified LNG to the system.
Explaining the current status of the project, MD, ISGS said that a detailed route survey was in progress to pave way for the engineering and design of the pipeline facilities.
Later while talking to the media, Chairman, Senate Committee said that it was important that IP Project start as soon as possible to bridge the rising natural gas demand-supply gap and assured ISGS and SSGC every support in ensuring the success of the project.
