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Pakistan, Russia set to sign $10b offshore pipeline deal next week

ISLAMABAD: In a major breakthrough, Pakistan and Russia are poised to sign a $10-billion offshore pipeline deal, a project planned by the latter to capture the energy market of Pakistan.

Sources told The Express Tribune that the cabinet had approved the signing of the gas pipeline laying deal and Pakistan ambassador to Russia had been authorized to ink a memorandum of understanding with Moscow.

The envoy is likely to ink the understanding in Moscow on Monday. Final cost of the project will be assessed following a feasibility study to be conducted by Russian energy giant Gazprom.

Russia has nominated Public Joint Stock Company Gazprom for implementation of the project. Pakistan’s cabinet has also permitted the company to conduct the feasibility study at its own cost and risk.

One-week deadline: Sindh warns cutting off gas supply to country

Inter State Gas Systems (ISGS) – a state-owned company of Pakistan established to handle gas import projects and is already working on gas pipeline schemes like Tapi, has been nominated by Pakistan to execute the offshore pipeline project along with Gazprom.

ISGS is also working on the $10-billion Turkmenistan, Afghanistan, Pakistan and India (Tapi) gas pipeline to connect South and Central Asia and construction work on the scheme in Pakistan will start in March next year.

These projects are called a game changer for Pakistan as they will not only lead to regional connectivity, but will also meet growing energy needs of the country.

Amid a long-running tussle with Europe and the United States over the annexation of Ukrainian region of Crimea, Russia is looking for alternative markets and wants to capitalise on the growing energy demand in South Asia.

Russia, which controls and manages huge gas reserves in energy-rich Iran, plans to export gas by laying an offshore pipeline through Gwadar Port to Pakistan and India, which are seen as alternative markets because Moscow fears it may lose energy consumers in Europe over the Crimea stand-off.

Russia has been a big gas exporter to European Union (EU) countries and Turkey since long and despite US anger the European bloc has continued to make imports to meet its energy needs.

Moscow receives gas from Turkmenistan and then exports it to EU states. Later, it has got gas deposits in Iran as well and is looking to gain a foothold in markets of Pakistan and India.

OGDC finds new deposits of oil, gas in Sindh

Pakistan has been experiencing gas shortages, particularly in winter, for the past many years as domestic production has stood static with new additions being offset by depleting old deposits.

In a bid to tackle the crisis, the previous government of Pakistan Muslim League-Nawaz (PML-N) kicked off liquefied natural gas (LNG) imports from Qatar under a 15-year agreement two and a half years ago and is bringing supplies through other sources as well.

According to a government official, after signing the MoU for the offshore pipeline, work on the feasibility study will begin in an attempt to assess viability of the project. Russia is even ready to finance the study. Russian gas exports touched an all-time high in 2017. According to Gazprom, gas flows to Europe and Turkey, excluding ex-Soviet states, hit a new daily record at 621.8 million cubic metres.

Annual exports touched 179.3 billion cubic metres (bcm) in 2016, a significant jump from the previous high of 161.5 bcm in 2013 and well above the 2015 total of 158.6 bcm.

Published in The Express Tribune, June 3rd, 2018.

SOURCE: https://tribune.com.pk/story/1726303/1-pakistan-russia-set-sign-10b-offshore-pipeline-deal-next-week/?amp=1&__twitter_impression=true

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Russia, China tighten ties with Iran

Astana, Kazakhstan: Russia and China moved Thursday to extend their economic influence in Iran, while Europeans are finding it harder to ignore efforts by Washington to isolate Tehran economically.

In one of the most concrete moves yet against renewed US efforts to choke off Iran economically, a Russian-led trade bloc signed an interim trade deal with Iran and signaled plans to negotiate a free trade zone.

Meanwhile, Iran´s oil minister said that Chinese state-owned oil company CNPC was ready to replace Total on a major gas field project in Iran if the French energy giant pulls out.

The fate of Total´s participation in the gas project demonstrates the difficulty the European Union faces in resisting Washington´s move as European firms stand to lose much more from busting US sanctions.

Earlier this month US President Donald Trump´s controversially pulled Washington out of an international deal with Iran that placed limits on its nuclear programme in return for easing economic sanctions.

China, Russia and EU members Britain, France and Germany were also signatories of the 2015 pact, opposed Washington´s abandonment of the deal which Iran had respected.

But companies around the world now face a difficult choice as Washington has previously slapped huge fines on firms which bust US sanctions.

This week the EU launched work on a plan to keep the nuclear deal alive and French President Emmanuel Macron said Thursday that one reason is “so that our businesses can remain” in Iran.

However Total has indicated it will go forward with the investment only if it wins an exemption from Washington on the sanctions.

Other European firms are likely to make a similar calculation that the US market is worth much more to them than Iran.

Danish shipping giant Maersk Tankers said Thursday it would cease its activities in Iran, while German insurer Allianz has also announced it plans to wind down its business deals there.

– Less to lose –

Meanwhile Russia, one of the strongest defenders of the Iran nuclear deal, tightened its trade ties with Tehran.

In the Kazakh capital Astana, the Russia-led Eurasian Economic Union trade bloc signed an interim trade deal with Iran that lowers tariffs on hundreds of goods.

The bloc that also comprises Armenia, Belarus, Kazakhstan and Kyrgyzstan, also plans to begin three years of talks with Iran that aim to create a free trade zone.

Russian firms have less to lose from bucking US sanctions. Many major Russian companies are already operating under tightening US sanctions over Moscow´s seizure of Crimea and its role in the Ukraine crisis.

Russian companies also traded with Iran when US sanctions were in place before the deal.

“They are used to working within legal and economic constraints,” Igor Delanoe, an analyst at the Franco-Russian Observatory group, said recently.

“The US has systematically forced Iran to turn more towards Russia and China.”

– Resistance to comply –

Beijing also signalled that it intends to continue trading with Iran.

“Under the prerequisite of not violating its international obligations, the Chinese side will continue to carry out normal and transparent practical cooperation with Iran,” said foreign ministry spokesman Geng Shuang.

He added that “the Chinese government always opposes the unilateral sanctions and the so-called long-arm jurisdiction that any country takes according to its domestic laws.”

The US says its sanctions apply to any transactions that are conducted in dollars, which are used in most international transactions, in particular in trading of crude oil.

But China has for years been working to increase trade using its currency and in March a yuan-denominated oil contract was launched in Shanghai.

“With trade skirmishes between the US and China and all kinds of political issues, I see resistance from Chinese crude buyers to comply” with US sanctions, said Victor Shum, vice president of the Energy group at IHS Markit, on CNBC TV.

Chinese companies were involved in at least $33 billion of infrastructure projects in China as of June last year, with Chinese government-linked institutions providing much of the financing using euros and yuan to avoid US sanctions.

SOURCE: https://www.thenews.com.pk/latest/317959-russia-china-tighten-ties-with-iran

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Russia keen to invest in CPEC, Balochistan: Counsel General

QUETTA: Balochistan Governor Muhammad Khan Achakzai said China-Pakistan Economic Corridor (CPEC) was creating prosperous opportunities for profitable investment in Balochistan, while ‘we want the companions of the country to take timely advantage from the Russian Federation’.

He said this while talking with Russia’s Consul General Dr Aleksander G Khozin, who called him at Governor House on Thursday. He said that Russian investors would provide all facilities and security in Balochistan’s Gwadar.

During a meeting, they discussed the relations between Pakistan and Russia, and the implementation of CPEC in the country. Governor Muhammad Khan said Balochistan is basically an agricultural area where there is a special significance of various vegetable and fruit production.

They expressed satisfaction over Russia and Pakistan’s growing relations. Russian Consulate General said that ‘we could provide Russia with an easy route to central Asia for trade expansion’.

Governor Balochistan highlighted the importance of regional cooperation organisation and regional unity, saying that due to the effective role of these organisations, the possibility of cooperation and development has been increased in the region. He hoped that relations of both countries would be more stable in future which is for benefit of people of both the countries.