Pakistan strikes key deal with Russia to buy Gas and Wheat

[AZADPAKISTAN2009]

Good deal , food is needed for poor and also Gas is needed as we have shortages
We are not at war with anyone

 

[PradoTLC]

Yes

thank you .. noted

i pray your kids grow up like Nawj..and be smart as him

cheers

 

[Clutch]

thank you .. noted

i pray your kids grow up like Nawj..and be smart as him

cheers

Some people are Dalits it's in their bloodline... Maybe my Pathan blood makes me fearless.

 

[PradoTLC]

Some people are Dalits it's in their bloodline... Maybe my Pathan blood makes me fearless.

it is more to do with what is in thier hearts..

you see all the die hard Nawj and PPP supporters i have noticed are deeply flawed characters...ie they like to screw the weak and get ahead in lines, do "clever" tricks to undermine some one else, ie corrupt from inside ... but most importantly deep down inside they hate to follow Islam. It was same at time of the Prophet Muhammad (PBUH) too..

if these people (Patwaris) said ok IK is a disappointment in terms of adminsitrative deliverance and supported a candidate who is "better" (corruption free , strong governace skills etc) than imran khan... then they would have a good point. but no.. they want the same SOB who screwed Pakistan left right and center for decades

it really shows what they are from inside.

 

[nahtanbob]

Hi,

Thanks for the tag.

Russia exports tonnes of Lng. They can provide us through their Yamal Lng project.

http://yamallng.ru/en/

LNG export value from Russia 2021 | Statista

The value of liquefied natural gas (LNG) exports from Russia reached approximately 7.3 billion U.S.

www.statista.com

The question is not whether Russia can provide Lng, but at what price? We can't afford spot buys, even at 50% discount. Dutch TTF traded above $100/mmbtu today, so we should be looking for 5 or 10 years term contract. Any long term contract price, whether through pipeline (TAPI, IP, or Russia-Kazakhstan-Uzbekistan/Turkmenistan-Afghanistan-Pakistan) or seaborne (Lng) has to be lower or match our 2021 Qatar Lng contract (that is 10.2% of three months averaged Brent), which will be extremely hard in case of Lng supplies for Russia.

Unfortunately, no information regarding supposed gas sales have been made public so we can only make guesses.

For pipeline gas, Russia can make couple of plays, a separate pipeline from 1) Uzbekistan (Pipeline No. 4, Fig 2) to Pakistan via Afghanistan, but in my opinion they would simply piggyback on 2) TAPI, that is, tie in the existing CAC Pipeline (Pipeline No. 2, Fig 2) in Turkmenistan to TAPI starting point, buy extra capacity in TAPI and provide Pakistan 750-1000 mmcfd (keeping it under Gazprom's sanction limit and financially less burdening on Russia). There's is a reason why Mr. Zamir Kabulov finds Tapi pipeline idea interesting.

https://tass.com/economy/1395497

But all this will come into fruition only after TAPI is constructed. So, at least 3 years from the start of construction, the contract term will be much longer 20-25 years (specially if they decide for standalone Uzbekistan route).

So, if a contract (a strategic energy partnership) was indeed signed, it would be multi pronged.

1. Work on pipeline construction through Uzbekistan Route or Turkmenistan route. (Physical gas supply starting after 3-5 years)
2. In meanwhile, supply LNG (1.5mtpa or 2 cargoes/ month) through short term contract (for 3-5 years term) starting October/ November 2022.

Hope, this makes some sense.

Do you know how long it takes to construct the pipeline ? how much it costs ? Pakistan cannot pay for it. someone will pay for it.

 

[farok84]

I read somewhere Europe prefers market rates instead of long term contracts from Russia (more of a criticism to their policy). Is that true?

Hi,

Europe's LT contracts are indexed with Dutch TTF. For example, Norwegian (Equinor) gas contract price roughly translates into 70% next day TTF + 30% next month's TTF. So their procurements are tied to LT price that is based on an expensive benchmark, which is innately reflective of the daily trading (spot markets)

Pakistan is definitely looking for long term fixed contract. The estimate I came across was $6.5 per mmbtu and was said to be cheaper than Qatar long term. ( Markets have changed now I am sure we won't rush to finalise a contract in the current market).

That price is highly unlikely, on an oil slope it translates to 6.5% of Brent (when Brent is $100/bbl). In my opinion, it won't be lower than 10.2%. It will be a win if Russia even agrees on it. There are other considerations too, specially for pipelined gas, the biggest one, the delivery point (this will change pipeline tariff and landfall prices) and which countries will be involved other than Central Asia, Afghanistan and Pakistan. For example, TAPI price (in its current form) is roughly 12% (plus $0.45/mmbtu Afghanistan transit), but it also includes pipeline's construction, operational cost and 5% return to Pakistan (on her 5% shares for $500m investment). Unlike Turkmengaz, Gazprom (Gazprombank) will have no issues funding the project. What it will indeed require, is a firm commitment on minimum offtakes (take or pay for atleast 50% of Annual Contract Quantity).

Russian Yamal LNG plant capacity is about 16.5-milion toms per annum.

I maintain that it is absurd for Pakistan to buy gas from Russia. TAPI pipeline is and was sponsored by the USA for India to pull out of the IPI pipeline deal. Economically it is not feasible to supply LNG to Pakistan to match delivered LNG price either from Qatar or from Australia. I let the readers decide what is the likely scenario.

Dear Niaz Sb,

Russia has her own plans of expanding her Lng portfolio from 30mtpa (2020) to 120mtpa (by 2035). They have already increased it to north of 40mtpa.

http://static.government.ru/media/files/l6DePkb3cDKTgzxbb6sdFc2npEPAd7SE.pdf

Russia looks for Asia LNG buyers to blunt Western sanctions' bite

Fivefold production bump planned by 2035 to counter rising US shale gas exports

asia.nikkei.com

SZWGroup | 2nd World Gas & LNG Series Conference-Exhibition (Russia 2017)

World Gas & LNG Conference-Exhibition is the best platform to help Russia gas authorities and operators solve challenges in gas industry development & pipeline & LNG projects, also a good opportunity for service and technology providers to show their technical competitive edge to help the local...

www.szwgroup.com

Yamal in 2020 had already delivered 14% more Lng (18.8mtpa) than designed capacity of her 3 trains, and her fourth one is already launched, bringing her nameplate capacity to 17.4mtpa. In 2021, Yamal Lng produced 19.64mtpa.

https://www.novatek.ru/en/business/yamal-lng/

TAPI, is like the kid who keeps on bouncing from one foster home to another. Turkmengaz (the social services) has already found it a new home.

If I were Gazprom, joining TAPI will be a temporary thing, that is until Turkmenistan increases its production to 33bcm in 2-3 years. Even after that the pipeline will have some extra capacity (it has 6 planned compressor stations). This will be a risk free investment for them. Once they gauge progress of TAPI and behavior of all concerned parties, they can proceed with construction of their own pipeline from Uzbekistan (CAC pipeline 4) to Pakistan via Afghanistan.

I tend to agree that it will be extremely difficult for Russia to compete with Qatar Lng (specially after our 2021 contract) in Pakistan's market and hence any Lng sales will be limited to short term (3-5 years) solution until TAPI or Uzbekistan route gets commissioned. The long term commitment will be through pipelined gas.

Do you know how long it takes to construct the pipeline ? how much it costs ? Pakistan cannot pay for it. someone will pay for it.

Hi,

Thank you for your enlightening comments. Kindly share in detail, the cost and timelines associated with such projects, from Feasibility to FEED, to FID, to EPC award, to Detailed Engineering, to Procurement, to Construction, to Pre-commissioning and finally to Commissioning.

Why should Pakistan pay for the pipeline construction? If Russia or Turkmenistan or Iran wants to sell their gas, they will find a financier to finance it. Pakistan can and will be a junior shareholder (5-10% shareholding, similar to TAPI) and will contribute finances accordingly.

 

[HAIDER]

Sui gas will be done soon and get ready for ... I am serious , Hamad Azar openly warn the end of Sui gas and he is right...only if Pak import gas from neighboring countries.

 

[خره مينه لګته وي]

Vietnam and Bangladesh abstained in the UN vote against Russia. Will it affect affect their GSP status with the EU?

Pakistan's GSP+ status will expire by the end of 2023 after completing it's 10 years term, Pakistan will need to re-apply for GSP+ Status so that it can get the same facility for next 10 years.. last year EU parliament also passed a resolution demanding the cancellation of Pakistans GSP+ status for failing to ensure basic human rights, minority rights, forced labours, laws pertaining to Blasphemy etc, but EU commission didn't suspend Pakistan's GSP+ nor extended it.

EC can cancel our GSP anytime if they find deficiencies & gaps in implementing the 27 UN conventions, the next monitoring report for gauging Pakistan’s performance on implementing the agreed 27 conventions was to become due in February 2022 but EC experts didn't visit Pakistan mainly due to COVID-related travel restrictions...

Right now I'm not sure about the future of GSP+ status esp after the Ukraine & Russian issue + the way EU countries wrote a letter to Pakistan to condemn the Russians + our govt response to them - those EU countries will definitely do some arm twisting of Pakistan when the time will come for availing the GSP+ status once again.. & you cannot ignore the Indian lobbies + their propaganda machine, last year they also tried their best to revoke our GSP+ status by lobbying the EU member countries.

Our govt position regarding Ukrainian & Russian conflict will play a part for not getting the GSP+ status ?? Time will tell.

if we play a mediating role btw the Ukrainians & Russians (Imran Khan received a phone call from the EU president -- European Union President Urges Imran Khan To Play Mediation Role Between Russia And Ukraine) + if we also successfully achieve the targets set by EU for Pakistan to implement the 27 UN conventions then no one is stopping Pakistan from getting the GSP+ status for another 10 years. If the former thing happens then it's definitely going to be a positive thing for Pakistan & it's image but if we distance ourselves from both + maintain neutrality then that is the right thing to do & the later part (implementing 27 UN conventions) will be the deciding factor which the govt needs to make sure that it's implemented.

 

[nahtanbob]

Thank you for your enlightening comments. Kindly share in detail, the cost and timelines associated with such projects, from Feasibility to FEED, to FID, to EPC award, to Detailed Engineering, to Procurement, to Construction, to Pre-commissioning and finally to Commissioning.

Why should Pakistan pay for the pipeline construction? If Russia or Turkmenistan or Iran wants to sell their gas, they will find a financier to finance it. Pakistan can and will be a junior shareholder (5-10% shareholding, similar to TAPI) and will contribute finances accordingly.

your comments are fair.

At this point why would Russia spend billions on such a pipeline ?

Is Pakistan large enough a market to warrant such an investment ?

you are yet to fulfil your commitments to Iran under gas pipeline. What promises do the Russians have that Pakistan won't wiggle out

 

[farok84]

At this point why would Russia spend billions on such a pipeline ?

Is Pakistan large enough a market to warrant such an investment ?

Hi,

In the words of great Baron Rothschild, "the time to buy is when there's blood in the streets."

Pakistan is big enough market, and contract will not be for 1 or 2 years, but for 25-30 years. Russia is not just investing in a pipeline, but for stakes in Pakistan's economy.

you are yet to fulfil your commitments to Iran under gas pipeline. What promises do the Russians have that Pakistan won't wiggle out

Which commitments?

 

[nahtanbob]

Hi,

In the words of great Baron Rothschild, "the time to buy is when there's blood in the streets."

Pakistan is big enough market, and contract will not be for 1 or 2 years, but for 25-30 years. Russia is not just investing in a pipeline, but for stakes in Pakistan's economy.



Which commitments?

You are asking Russia to spend $10 billion building a pipeline to sell Pakistan $3 billion in natural gas annually The economics do not add up.
There is cost of transit & security in Central Asia & Afghanistan.

Iran built a pipeline cost hundreds of millions of dollars to supply natural gas to Pakistan and India. You have not bought a dime.

 

[farok84]

You are asking Russia to spend $10 billion building a pipeline to sell Pakistan $3 billion in natural gas annually The economics do not add up.
There is cost of transit & security in Central Asia & Afghanistan.

Hi,

No one is asking Russia to spend $10 Billion. I suppose you are referring to Tapi?

If you were, the $10 Billion figure is not for the construction of pipeline, the pipeline won't cost more than $5B, (for comparison, the cost of PSGP is around $3B for 1100km so for 1800km, at max its gonna be around $6B, also a part of it around 40-50% will be funneled back into Russian industries, pipelines procurement, machineries etc.), the rest is for increasing Turkmenistan's gas production and processing. The annual revenues just from ~1350mmcfd sales to Pakistan at current GSPA, will be north of $7B, for 25 years it will be more than $175B.

If you were referring to, Uzbekistan route, the cost of the pipeline will be even less (less than $5B, Gazprom operated pipeline, financed by Gazprombank). The nominal gas sales of ~750mmcfd will make them more than $3.9B per annum at todays prices (keeping Tapi's price as standard). Obviously, Pakistan can import up to 1500mcfd from Gazprom without getting penalized/ sanctioned by current US sanctions. The transit through Afghanistan will be paid by Pakistan, in Uzbekistan, shared by Gazprom and Pakistan, and through Kazakhstan paid by Gazprom, and will be part of contract price.

Iran built a pipeline cost hundreds of millions of dollars to supply natural gas to Pakistan and India. You have not bought a dime.

India opted out of it and has not signed GSPA with Iran, so no point in bringing it here. Iran backed out from financing the pipeline and hence the delays.

 

[nahtanbob]

Hi,

No one is asking Russia to spend $10 Billion. I suppose you are referring to Tapi?

If you were, the $10 Billion figure is not for the construction of pipeline, the pipeline won't cost more than $5B, (for comparison, the cost of PSGP is around $3B for 1100km so for 1800km, at max its gonna be around $6B, also a part of it around 40-50% will be funneled back into Russian industries, pipelines procurement, machineries etc.), the rest is for increasing Turkmenistan's gas production and processing. The annual revenues just from ~1350mmcfd sales to Pakistan at current GSPA, will be north of $7B, for 25 years it will be more than $175B.

If you were referring to, Uzbekistan route, the cost of the pipeline will be even less (less than $5B, Gazprom operated pipeline, financed by Gazprombank). The nominal gas sales of ~750mmcfd will make them more than $3.9B per annum at todays prices (keeping Tapi's price as standard). Obviously, Pakistan can import up to 1500mcfd from Gazprom without getting penalized/ sanctioned by current US sanctions. The transit through Afghanistan will be paid by Pakistan, in Uzbekistan, shared by Gazprom and Pakistan, and through Kazakhstan paid by Gazprom, and will be part of contract price.




India opted out of it and has not signed GSPA with Iran, so no point in bringing it here. Iran backed out from financing the pipeline and hence the delays.

initially you wanted Russian natural gas. Now you want Turkmenistan natural gas. Pipeline from Russia wll cost $10 billion

you are pulling numbers out of the air. Pakistani natural gas purchases for a year are around $2.7 billion.

Pakistan gets $4.5bn facility for oil, LNG imports

Three-year trade financing facility will cover the import cost of crude, petroleum products and liquefied natural gas.

www.dawn.com

Pakistan | Imports and Exports | World | ALL COMMODITIES | Value (US$) and Value Growth, YoY (%) | 2009 - 2020

 

[farok84]

initially you wanted Russian natural gas. Now you want Turkmenistan natural gas. Pipeline from Russia wll cost $10 billion

you are pulling numbers out of the air. Pakistani natural gas purchases for a year are around $2.7 billion.

Pakistan gets $4.5bn facility for oil, LNG imports

Three-year trade financing facility will cover the import cost of crude, petroleum products and liquefied natural gas.

www.dawn.com

Pakistan | Imports and Exports | World | ALL COMMODITIES | Value (US$) and Value Growth, YoY (%) | 2009 - 2020

Hi,

Please go through what I have written in earlier posts and the potential routes for Russian gas through Turkmenistan and Uzbekistan.

Can you please provide how you came up with $10B figure and from what route?

Also, the current TAPI gas price is roughly equivalent to 12% of Brent. At today's price (~$120/bbl), it is equivalent to $14.4/mmbtu. Feel free to correct my math. The data you are quoting is from 2020 and 2021 and is not reflective of current prices. Also, Pakistan is going to buy Russian/ Turkmen/ Iranian gas on top of what it is importing now, its not a replacement.

 

[nahtanbob]

Hi,

Please go through what I have written in earlier posts and the potential routes for Russian gas through Turkmenistan and Uzbekistan.

Can you please provide how you came up with $10B figure and from what route?

Also, the current TAPI gas price is roughly equivalent to 12% of Brent. At today's price (~$120/bbl), it is equivalent to $14.4/mmbtu. Feel free to correct my math. The data you are quoting is from 2020 and 2021 and is not reflective of current prices. Also, Pakistan is going to buy Russian/ Turkmen/ Iranian gas on top of what it is importing now, its not a replacement.

from Russia to Pakistan gas pipeline should be $10 billion which is why I think no one will build it. I won't discuss the mess of running a pipeline through Afghanistan.

the current prices are not sustainable unless you think this is the new norm. Pakistan is not foolish to sign a long term deal based on today's prizes