Pakistani stream: Russia goes South, and this is only the beginning

Sergey Savchuk

The foreign press reports that Russia continues to work to build up its strategic presence at key points on the world map. In this case, we are not talking about the army and the navy, but about the energy sector and specifically about the “Pakistani Stream”.

The other day in Islamabad, a bilateral meeting ended, at which groups of technical specialists from both countries confirmed their readiness to implement the project, for which the development and coordination of technical issues and documentation will continue. The main difference from the memorandums of previous meetings is that geological exploration will begin along the route of the potential gas pipeline, that is, the future pipe makes its first step from paper to the ground.

Initially, the idea of the project arose at a difficult time. In 2015, an intergovernmental agreement was signed on the development and construction of the North-South gas pipeline with a length of almost 1,100 kilometers and a cost of about $ 2 billion. The implication was that Russian contractors would build a transit line from the port of Karachi to the city of Lahore. The peculiarity of the technical idea was that it was necessary to additionally build a regasification terminal in the port, where LNG would be delivered using sea LNG carriers, and after being transferred back to a volatile state, it would go strictly north to the Punjab province.

For the next two years, the project moved on neither shaky nor roll. The parties could not agree on the size of tariffs for pumping gas, it is noteworthy that Russia demanded an increase in cost, otherwise, according to Moscow, the project was economically unprofitable. Then the next US sanctions were imposed on the Rostec corporation, the key executor on the part of Russia, which further impeded the implementation. Last fall, the parties revised the terms of the agreement again, but exclusively at the request of Islamabad. The share of Pakistan’s participation in the project has grown from 51 to 74 percent, while the condition of attracting and using only Russian materials, components and equipment is strictly stipulated. It was decided that Russia’s investment will not exceed 25 percent, and Pakistan will cover all other costs.

In the spring of this year, the project was renamed “Pakistani Stream”, and the energy ministers of both countries announced their readiness to start construction in the very near future.

To understand the idea and purpose of any such project, you need not listen to the statements of politicians and all kinds of experts, but arm yourself with a map. Economic geography is a wonderful subject, providing an answer to even those questions that are diligently avoided at official press conferences.

Pakistan is a country with a population of over 220 million. It seems to be not very much against the background of neighboring India and China, but all the same, these more than two hundred million in the 21st century need not only be fed, but also provided with electricity and other benefits of civilization. If you mark on tracing paper the location of all Pakistan’s power plants, and then superimpose this tracing paper on a physical map of the country, a critical imbalance will be visible to the naked eye.

Generation facilities, which are 20 stations operating on oil products, 22 thermal power plants operating on natural gas, nine coal and three nuclear power plants are located on a conventional arc that goes from south to east and further north, abruptly breaking off in the area of the capital. The most power-equipped are the southern part of Baluchistan in the Karachi region and its central part along the Quetta-Loralay-Multan line, while the lion’s share of power plants is concentrated in the Punjab province near the already mentioned Lahore. A little further north, near Islamabad, there are three coal-fired power plants, but their only task is to meet the needs of the capital and surrounding areas.

The same map shows that the entire southwestern part of the country along the border with Iran and Afghanistan practically does not have its own generation, and in the region north of Islamabad, bounded by Kashmir and China, several small hydropower plants act as the only source of energy.

Naturally, Pakistan needs light in the homes of its citizens and reliable sources of energy that can not only provide for its own needs, but also lucrative trade with its large neighbors.

The implementation of the “Pakistani Stream” with a capacity of 12.4 billion cubic meters of gas per year will provide fuel for new power plants, which, in turn, will feed industrial enterprises concentrated in Punjab, on the border with India. If the project turns out to be successful, nothing prevents the gas pipeline from being extended to the capital, the transport shoulder from the city of Multan to Islamabad is just over four hundred kilometers.

To understand where the interest of Russia is here, it is necessary to mention a few points.

It is worth starting with the TAPI gas pipeline (Turkmenistan – Afghanistan – Pakistan – India), in which Russia acted as a technical guarantor, as well as a supplier of equipment and pipes. The ultimate recipient of gas is India, but all transit countries are experiencing a colossal need for blue fuel and therefore will clearly claim their share of hydrocarbons. With regard to Pakistan, this is evidenced by the fact that according to the terms of reference for the “stream”, this gas main in the area of the city of Multan should be included in the TAPI gas pipeline. The total capacity of the two gas pipelines at this point will be 55 billion cubic meters, which with absolute accuracy corresponds to any of the Nord Streams. Having such resources on hand,

In addition, the formation of a gas market in a country like Pakistan, where almost three times as many people live as, say, in Germany or Turkey, is guaranteed to reshape the global hydrocarbon market. First of all, of course, it is extremely interesting to Qatar, which will be able to supply its own liquefied gas along the shortest route from the Persian Gulf to the Gulf of Oman and further to Karachi. At the same time, Qatar is not in a position to significantly increase LNG production, which means that in the future, Qatari gas supplies to Europe will fall, which will further increase the importance of Russian gas pipelines and supplies through them.

In addition, Russia, supplying pipes and other equipment, does not sell grassroots raw materials, but the final products with the maximum added value, loading a long chain of cooperation with work – from geophysicists to steelmakers-pipe-rolling.

There is not the slightest doubt that the revitalization of the region is connected both with the political changes in Afghanistan and with the completion of the construction of Nord Stream 2. Russia has clearly shown that it is capable of completing any projects, even under the pressure of massive sanctions. India is striving to become the main metallurgical power in the world, it simultaneously needs the iron ore of Afghanistan, coking coal and blue fuel from Russia. Pakistan wants to reach a new level of industrial development, but this again requires natural gas, and all neighboring countries themselves are experiencing a deficit in it and clearly do not intend to share it with Islamabad. Afghanistan, in principle, is ready to absorb any amount of resources, since the electrification of the country, thanks to the incessant war, is at a medieval level. The American withdrawal from Afghanistan was a stone that moved an avalanche of global transformation.

If the Taliban manage to keep the country from another all-out war of all against all, then in the very near future we will witness a battle for new energy, trade and industrial markets. I am glad that Russia has already staked out one of the key and most promising areas of development.

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