Russia-backed Pakistan’s proposed gas pipeline hit major roadblock

Pakistan’s proposed Russia-backed gas pipeline has hit a major roadblock with Islamabad dragging its feet on the project ostensibly under the U.S. pressure.

A meeting held this month in Moscow witnessed heated exchanges making the future of the pipeline uncertain, ET has learnt. The project was meant to build a liquefied natural gas (LNG) pipeline from Karachi to Lahore to overcome the gas shortage in Pakistan’s Punjab province.

A Pakistani delegation had visited Moscow on October 10 and the gas pipeline project was also on agenda along with the long-term oil deal, ET has reliably learnt.


The Russians advised the Pakistanis to put their house in order over the structure of the pipeline, sources said. Russia had earlier nominated RT Global for the project whereas Pakistan had nominated the state-owned Inter State Gas Systems (ISGS).

However, in early 2016, the US imposed sanctions on RT Global -- leaving the project -- then called the North-South Gas Pipeline -- in doldrums. Since then, Pakistan and Russia have changed the structure of the pipeline almost six times. In July 2021, the two sides again changed the structure of the pipeline and decided that Pakistan’s state-owned gas companies would hold 74% of its shares whereas the Russian firms would own 26% shares. This meant that the Pakistani companies had to invest 74% of the total funding required whereas the Russian firms would provide the rest.

Pakistan and Russia signed an amended Intergovernmental agreement (IGA) to start the construction work on the pipeline project. Under a revised deal, it was decided that the Pakistan Stream Gas Pipeline special purpose vehicle (SPV) would also be set up within 60 days of this signing to implement the project. However, there was no progress on a commercial deal since then.

Sources claimed that the pipeline had been delayed because of the involvement of several stakeholders in the project