China to back Iran-Pakistan gas pipeline project - Tehran Times
Pakistan President Asif Ali Zardari and Petroleum Minister Dr Asim Hussain remained successful in convincing the Chinese leadership during their recent visit to China to take part in the bidding for the construction of the Iran-Pakistan (IP) gas pipeline project.
An official source said after getting China’s backing, the government had extended the deadline for the prequalification of the engineering, procurement, construction (EPC) and commissioning of the 785km-long pipeline from June 8 to June 22.
He said a leading Chinese firm was likely to participate in the construction of the IP pipeline.
He said it was a big achievement, as China’s participation in the project would ensure its safety, adding that Iran had already assured Pakistan of providing all the financial and technical assistance, including equipment and compressors, for the commissioning of the pipeline.
The estimated cost of the project on the Pakistani side is estimated at $1.2 billion.
The 42-inch diameter gas pipeline will be transporting high pressure one billion cubic feet gas per day (bcfd) from an off-take point near Gwadar to gas integration point near Nawabshah. The country is faced with a gas shortage of 2bcfd, which is estimated to increase to 6bcfd in the next five years if new discoveries are not made or gas is not imported.
The pipeline will follow the coastal route and will be safe from any sabotage activities in Balochistan. The government is ready to offer the project, either on EPC or turnkey basis, per the prequalification document. Construction includes pipeline, compressor stations, main line block valve stations, pig launching and receiving stations, CP installations, SCADA other related equipment, installations and pipeline crossings across various nullahs and rivers including River Indus.
Earlier, a selected consortium led by Industrial and Commercial Bank of China (ICBC) and Habib Bank of Pakistan (HBL) waned away from financing the IP project after the United States issued strong statements against the project.
Pakistan was looking towards Gazprom to undertake the project but the deal did not materialize. The government has already decided to dedicate the imported gas through the IP pipeline for the power sector as power shortage is projected to increase over 11,000MW in the next few years. The government is working to starting process for setting up new independent power producers (IPPs) of 5,000MW cumulative capacity so that they should be ready for commissioning by the time natural gas starts flowing from the IP pipeline in December 2014.
Beijing finally agrees to lay IP gas line in Pak territory
In a new development China, which had earlier backtracked from being the financial advisor for laying the 785 km pipeline in Pakistan’s territory under the Iran-Pakistan (IP) gas project, has once again shown willingness to become the EPCC (Engineering Procurement Construction and Commissioning) contactor.
President Asif Ali Zardari and federal minister for petroleum and natural resources Dr Asim Hussain who are currently in Beijing have reportedly succeeded in persuading China to take part in the IP project, a senior official quoting the information trickling down from China told The News.
“Managing director of Inter-State Gas System Mr Mubin Saulat dashed to China for finaliZing the details and Pakistan has agreed 90 percent of the terms and conditions offered by China for playing the role as contractor of the project.”
Pakistan had earlier issued tenders on April 27 to build the 785 kilometers long pipeline in two years’ time. The interested companies were bound to submit their technical and financial bids for the project by June 8. Now under the new scenario, the date of submitting the technical and financial bid has been extended to June 22 to acccommodate the Chinese company.
About 750 million to 1 billion cubic feet of gas per day will be transported at high pressure through 42-inch diameter pipeline. The contractor will also install three pressure compressors in the pipeline from Pak-Iran border to Nawabshah.
The official said the strategy, which was earlier worked out between Pakistan and Iran, has been slightly changed. Now the Chinese company will complete the project, but Iran will provide the pipeline, gas compressors and block valves. Earlier it was decided that the Iranian company would construct the project in Pakistan’s territory.
To a question he said that Pakistan would provide reasonable funds for the project and in case of any shortage the Iranian offer of $250-500 million is available. He said the increase of GDS (Gas Development Surcharge) on gas to five sectors would help collect Rs102 billion in one year that would be utilized for laying down the pipeline.
Under the gas sales purchase agreement (GSPA), the official said, Pakistan is bound to have a first take of Iranian gas by December 2014 and in case of failure, it will have to pay $ 1 million per day to Iran as penalty.
Secretary Petroleum Ijaz Chaudhry said that Pak-Iran gas pipeline project would be completed up to December 2014.
Talking to a private news channel, he said that Pakistan is serious in the gas pipeline project.
He added that companies have been short listed for the construction of the pipeline.
Ijaz Chaudhry said that Iran has offered support for the project in shape of materials.
He further said that Pakistan is looking also for other options.
He added that talks were underway with Russian and Chinese companies.
The government will provide funds to build infrastructure of the project from its treasury, the Secretary added.
