Time to import LNG from Russia

According to media reports, Italian LNG Company ENI and Singapore-based GUNVOR have cancelled their term LNG cargoes, scheduled for delivery to Pakistan in March 2022. Since the signing of the term agreement by Pakistan LNG Limited (PLL) in 2017, ENI has defaulted four times and GUNVOR two times on term LNG cargoes. The reason for the default is believed to be higher spot prices, prompting these companies to sell LNG cargoes meant for Pakistan in the spot market. The present gas crisis in Pakistan is mainly due to unethical practices of these two companies.

Due to the devastating impact of gas shortages on households, industry, businesses and the transport sector, Pakistan needs reliable partners for sourcing LNG. For some time now, Pakistan has viewed Russia as a source for LNG import. Russia too has looked at Pakistan as a potential market for its LNG export. This mutuality of interest resulted in the signing of a Government to Government (G2G) Agreement between Islamabad and Moscow on 13 October 2017 on “Cooperation in the Sphere of Liquefied Natural Gas Supplies.” Russian Public Joint Stock Company Gazprom and PLL were nominated for implementation of the agreement. However, the agreement has remained dormant ever since. According to reliable sources, Russia, nevertheless, remains keen on cooperating with Pakistan in the sphere of LNG.

Prime Minister Imran Khan’s visit to Russia on 23-24 February 2022, which marks the culmination of sustained efforts made by both Pakistan and Russia over the last one and a half decades to enhance relations in diverse fields, offers an opportunity to explore the possibility of concluding a long-term arrangement with Russia on provision of LNG to Pakistan. As an energy giant, Russia is a major supplier of piped as well as liquefied gas to many countries in Europe and elsewhere. India is also among the LNG importers from Russia.

Due to the devastating impact of gas shortages on households, industry, businesses and the transport sector, Pakistan needs reliable partners for sourcing LNG. 

Qazi M. Khalilullah

Cooperation between Pakistan and Russia in the field of energy will, in any case, be a key item on the agenda of Prime Minister Imran Khan’s summit with President Vladimir Putin during the two-day visit, as both countries seek to implement the bilateral agreement signed in Islamabad in 2015 on the 1100 km long North-South (renamed Pakistan Stream recently) gas pipeline that would be built by Russia from Karachi to Kasur with investments of over US$ 2 billion.

Energy cooperation has always been one of the most important topics during the meetings of the leaders of the two countries as well as Russia-Pakistan Intergovernmental Commission (IGC) on Trade, Economic, Scientific and Technical Cooperation. Seven meetings of the IGC have been held so far. The last meeting was held in the Russian city of Yekaterinburg on 24-26 November, 2021. It was chaired by the Minister for Economic Affairs Omar Ayub Khan from the Pakistan side and Minister for Energy Nikolai Shulginov from the Russian side.

At the seventh IGC meeting, apart from reiterating their respective commitment to the Pakistan stream gas pipeline, the two sides agreed to explore cooperation in many other areas of mutual interest in the energy sector including offshore and onshore oil and gas exploration, non-destructive testing of oil and gas transport infrastructure, joint projects in pipeline construction, geological exploration for hydrocarbons and joint development of oil and gas fields. Both sides also discussed the possibility of investment by Russian companies in setting up oil refineries and building strategic oil and gas storage in Pakistan.

Pakistan and Russia also have interests in a regional undersea gas pipeline. In this connection, Inter-State Gas Systems (ISGS) of Pakistan and Gazprom of Russia signed an MoU in February 2019 on conducting feasibility studies for a subsea pipeline from Middle East to South Asia. Russia and Pakistan can also cooperate on other regional projects such as TAPI gas pipeline project from Turkmenistan to Pakistan and India through Afghanistan and CASA-1000 power transition project from Kyrgyzstan and Tajikistan to Pakistan through Afghanistan.

In view of depleting gas reserves in Pakistan, strengthening cooperation with a reliable partner like Russia is critical for Pakistan’s energy security. Prime Minister’s visit to Russia is therefore not only timely but also an opportunity to further strengthen cooperation with Russia, inter alia, in the important field of energy. Needless to say, the Prime Minister’s visit to Moscow will take Pakistan-Russia relations to a new level.

*The writer is Executive Director Center for International Strategic Studies Sindh and Former Ambassador of Pakistan to Russia, Cuba and Myanmar. He can be contacted at [email protected].