Russia and Pakistan have signed a pact to make changes to a 2015 intergovernmental agreement aimed at finally launching a stalled project to build a gas pipeline in the South Asian country.
A planned 1100-kilometre pipeline is intended to transport imported regasified natural gas from a liquefied natural gas terminal in Port Qasim near Karachi to Kasur in Punjab province.
The new protocol introduces recent changes to the project, agreed by the two countries, to reduce Russia's controlling stake in the project to 26% and pass operatorship into local hands.
The Russian stake will be held by a special purpose vehicle, with a preliminary agreement in place that this be formed by three Russian companies, two of which are pipeline suppliers.
These are Tsentr Ekspluatatsionnykh Uslug, Trubnaya Metallurgicheskaya Kompaniya (TMK) and Eurasian Pipeline Consortium.
Tsentr Ekspluatatsionnykh Uslug is owned by the Russian government and is managed by the country’s Energy Ministry, with Russian Energy Minister Nikolay Shulginov signing the protocol on behalf of the country.
TMK is a major Russian pipe manufacturer that is owned by Dmitry Pumpyansky, a Russian billionaire with international ambitions.
According to reports in Moscow, Eurasian Pipeline Consortium is controlled by Russian businessman Arkady Karmanov.
Despite having no pipe-manufacturing capacities, this contractor has recently grown to be a major pipe supplier to state-controlled gas monopoly Gazprom and other Russian oil and gas players.
The next step in the process is for the three partners to agree each other’s role in the venture and formally launch the special purpose vehicle.
However, the timing for completion of this phase is unclear, according to sources that are close to the project.
Pakistan’s 74% shareholding in the project is shared between the country’s Sui Gas and Sui Northern companies.
Shareholders will finance the project based on the size of their stakes.
TMK is expected to take a lead in supplying the pipe to Pakistan.
The Russian company earlier completed the acquisition of an 87% stake in its local competitor, ChelPipe, for $920 million, aiming to grow its total capacity to produce wide-diameter pipe.
ChelPipe’s acquisition has also opened the African market for TMK.
According to industry sources, ChelPipe has won a tender to supply 270,000 tonnes of 24-inch pipe to build the East African Crude Oil pipeline in Uganda, spanning 1445 kilometres.
However, TMK told Upstream the Uganda pipe supply deal has not been finalised because the tender is still running.
Sources said other bidders for the pipe contract are a consortium of India's Welspun Steel and Japan's JFE Steel, China's Baowu Steel and Panyu Chu Kong Steel, US SeAH Steel, Japan's Nippon Steel and Greece's Corinth Pipeworks.