Pakistan's government will hold talks next week over the potential involvement of Russian gas giant Gazprom in the proposed Pakistan-Iran gas pipeline after the Industrial and Commercial Bank of China backed away from the project, an official at Pakistan's Ministry of Petroleum and Natural Resources said Thursday.
Pakistani and Russian officials will hold talks in Moscow next week to discuss the possibility of awarding the gas pipeline contract to Gazprom, the official in Islamabad said.
The government is pressing ahead with the $1.5 billion project despite the reluctance of ICBC to agree to provide financial advisory services to raise funds for the project, reportedly due to US pressure.
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The Chinese bank backed away from the project in early March citing the "changing geo-political situation in the region." The US has threatened to impose sanctions on companies that deal with Iran.
Gazprom had shown interest in the project, and in making all arrangements from fund-raising and construction, the ministry official said.
During a visit by Pakistan's Foreign Minister Hina Rabbani Khar to Russia in February, Moscow offered to fully finance the $1.5 billion project if Gazprom was awarded the contract without a bidding process.
Pakistan plans to buy between 750,000 Mcf/day and 1 Bcf/day of gas from Iran via the proposed 900 kilometer (560 mile) pipeline.
Pakistan's top economic decision-making body, the Economic Coordination Committee, on March 13 discussed four options proposed by Ministry of Petroleum to fund the pipeline: a gas infrastructure development tax, a second consortium, government-to-government arrangements with China and/or Russia, or a government-to-government arrangement with Iran.
Pakistan is facing a looming gas crisis, with supply rationing inevitable in the near future, the country's central bank said in December.
Net demand in fiscal 2011-12 (July-June) was forecast at 5.497 Bcf/d, increasing to 6.354 Bcf/d in 2015-16, with the supply shortfall set to increase from 2.458 Bcf/d to 3.021 Bcf/d over the same period.
