KARACHI – Russia is stepping up diplomatic efforts to rekindle ties with Pakistan through a $ 2.5 billion pipeline while offering to step up support for the fight against terrorism. Analysts see these measures as an offer to acquire a new energy market to offset the decline in Western business and to increase regional clout as the United States deepens its ties with India and are leaving Afghanistan.
On July 15, a Russian delegation signed a pact in Islamabad stipulating the terms of the PakStream Gas Pipeline Project (PSGP), formerly known as the North-South Gas Pipeline Project.
The 1,100 km pipeline will more than double Pakistan’s current capacity to transport 1.2 billion cubes. feet of imported natural gas per day from the liquid natural gas terminals in the southern port of Karachi to the Punjab in the north, where demand is high. It is expected to enter service by 2023.
Some government officials had expressed doubts about awarding the contract to Russia when local companies could build a cheaper pipeline. The government did, however, do the deal, citing Russian expertise with wider gas lines and technical limitations of local companies.
The pipeline will be the first major Russian investment in Pakistan in decades as it helped establish the oil and gas development company in the 1960s and Pakistan Steel Mills in the 1970s.
Relations between the two states weakened in the 1980s when Pakistan helped the United States channel military and financial aid to the Afghan mujahedin against the Soviet-backed government.
Today, however, Russia led by President Vladimir Putin searches for new gas markets as Europe – Russia’s biggest energy customer – turns to cleaner gas from the United States, according to Osama. Rizvi, analyst at Primary Vision, an American commodities company. Advice. “For Pakistan, this is indeed a very positive development as the country suffers from a huge energy deficit,” he said.
Pakistan has relied on indigenous gas reserves for electricity for most of its 74 years of existence. Over the past two decades, however, the country has struggled to increase its gas production and modernize its energy infrastructure in the face of growing demand from a growing population and industrialization.
Since 2015, Pakistan has mainly purchased liquid natural gas from Qatar under a long-term contract or through spot purchases on the international market to fill the supply gap.
Last month, an LNG terminal unexpectedly shut down for maintenance when a local gas field was also shut down, sparking public outcry over widespread gas blackouts and exposing Pakistan’s fragile energy supply chain.
The government headed by Prime Minister Imran Khan is trying to speed up gas infrastructure to meet future energy demands. Two new LNG terminals and underground storage at Port Qasim in Karachi are expected to be added over the next three years, in addition to the PSGP.
Initially, a gas pipeline agreement with Russia was signed in 2015 under the government of then Prime Minister Nawaz Sharif. But work on the project was stalled for six years, mostly due to Western sanctions against Rostec – the state-controlled Russian tech giant that had a stake in the project – following Russia’s annexation of Crimea. in 2014.
Following renegotiations, the majority stake of Russia in the project was reduced from 80% to 26%, while the majority stake and the right to operate were ceded to Pakistan.
“It appears the project was designed to avoid sanctions,” said Owais Arshad, an Ontario-based risk analyst who advises financial institutions. “In particular, the percentage of ownership is below the threshold that would normally trigger punitive action by the United States.”
US sanctions against Russian energy companies target international projects in which Russian entities have a 33% or more stake.
The Foreign Ministry confirmed at a press conference earlier this month that invitations had been exchanged for a visit by the two heads of state, but no timetable has been set.
This development comes amid a series of high-level diplomatic meetings, including the visit of Russian Foreign Minister Sergei Lavrov to Islamabad in April – the first visit by a Russian Foreign Minister to Pakistan in nearly a year. decade. Lavrov promised to provide Pakistan with “special military equipment” to fight terrorism. The two sides also agreed to hold frequent joint military exercises.
“Until now, Russia’s defense cooperation with Pakistan has been a relatively new and limited phenomenon,” said Krzysztof Iwanek, director of the Asia Research Center at the University of War Studies. Poland. “In recent years, a security cooperation agreement has been signed, a few Russian helicopters have been sold to Pakistan, officers from both countries have visited, joint military exercises have been held.”
On the other hand, the Afghan peace process has been at the center of discussions between national security advisers and foreign ministers of the two states in recent months. Russia is organizing Afghan reconciliation talks with the Taliban, including Pakistan.
“Russia wants to step up its game in Afghanistan as a diplomatic player in the Afghan reconciliation process, and therefore Pakistan – with its close ties to the Taliban – is a useful partner,” said Michael Kugelman, deputy director of the program. Asia. at the Wilson Center, a Washington think tank. “Russia is moving closer to China, a key ally of Pakistan. And Russia’s long-standing relationship with India is starting to falter amid deepening US-Indian relations.”
Iwanek also noted that Russia could reach out to Pakistan in response to strengthening US-India security cooperation, especially arms sales. But although this is a significant irritant, it has not led to a complete breakdown of Indo-Russian relations, he added.