Russia looks to develop $2.5bn gas pipeline in Pakistan

Russia’s state-owned company Rostekh intends to construct a gas pipeline connecting Pakistan in 2017 which is expected to involve around $2.5bn of investment.

The project will be the country’s first big scale project one in Pakistan since the 1970s, according to news publication Russia Beyond the Headlines.

The firm is likely to invite both Russian and foreign financing for construction of the 680 mile long pipeline.

Credit availability from western banks will, however, be difficult for the company, which is subject to European and US sanction lists.

The market for the Russian pipeline is likely to be affected by Peace Pipeline, which is already under developmental stage and will be connecting Iran with Pakistan.

A preliminary deal for the Peace Pipeline was signed by China and Pakistan in April this year. While construction of a 560 mile long section of the pipeline within Iran has been completed, Pakistan is in talks with China for developing the Pakistani section of the pipeline at an estimated cost of $2bn.

Russia need to strengthen its position in Pakistan, especially for gas transits, since the country might serve as a fundamental route connecting it with India.

Rusenergy partner Mikhail Krutikhin was quoted by Gazeta.ru as saying: "In essence, the gas pipeline that Russia will build will become a part of the future gas route from Iran to China.

"Participating in the Pakistani project is not to Russia’s advantage.

"Supplies from Iran will reduce China’s dependence on gas, including gas from Russia."