This is with reference to a news item published in a section of press regarding the North South gas pipeline project and the progress being made in this regard.
At the outset, the contents of the news are concocted and appear to malign the high ups in the ministry as well as in its subsidiary-ISGS. Such unverified news items intend to not only tarnish the image of the company and the country but it would also impede the fast growing strategic relationship between Pakistan and the Russian Federation.
It is pertinent to mention here that similar misleading media coverage had led the country to face arbitral award in the Reko diq case. The GoP is cognizant of the fact and will not like to face similar situation due to misrepresentative news item(s) having absolutely no idea about the implications and delicacies of the Govt. to Govt. international agreements.
The North South Gas Pipeline Project is a hallmark Project of Pakistan’s strategic relations with the Russian Federation and is carefully yet aggressively being pursued by Petroleum Division despite challenges being faced due to international developments.
Speaking of significant progress on the Project, Petroleum Division has obtained route approval for the Project from Ministry of Defense. The Oil and Gas Regulatory Authority has granted Construction and Operation license to ISGS. The company has also substantially negotiated the Built, Own, Operation and Transfer Agreement with its counterpart Russian entity.
The Russian side has submitted the price proposal which is under active consideration of Price Negotiation Committee constituted by ECC of the Cabinet.
The Inter-Governmental Agreement enshrines that the Project will be implemented through the nominated entities of both sides. The nominated entity of Russia was hit by US sanctions, where after both sides decided to carry out the Project through sanction-free SPV. For this, the Russian side has conceded to propose a revised structure.
The entity by Russian side in the latest proposed structure is on the Sanction Watch List of US government. Such entity would be a vulnerable entity to be engaged with for the execution of the Project, which is going to operate in Pakistan for a period of 25 years. Moreover, the entity has no experience in laying and operation of the pipeline systems. This might have impact on ISGS’ other transnational Projects. Thus, the decision is to follow a cautious approach.
It is important to note that Pakistan has no role in proposing an entity or amending the corporate structure, however, the proposed corporate structure has to be a sanction-free in accordance with the ECC decision. Pakistan position was clearly communicated to Russian side in a meeting held in July 2019 that the GoP does not have a risk appetite in this regard in the wake of prevalent US sanctions regime as well as FATF regulations and, therefore, would like to see a sanction-free corporate structure. Therefore, the Russian side is currently revising its structure.
Moreover, both sides have agreed to discuss the issue in upcoming Pakistan-Russia working meeting scheduled in December 2019. Therefore, the news item is absolutely unfounded, misleading and against the ground realities.
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