Pakistan Seeks Funding to Build Gas Pipeline

Pakistan intends to borrow $300 million from local banks for a $1.3 billion pipeline that will carry natural gas from Iran.

Mobin Saulat, acting managing director of Inter State Gas Systems Ltd., said that state-owned companies will provide about $210 million in equity the pipeline. Inter State Gas Systems is responsible for gas pipeline project.

Saulat noted that Pakistan is likely to approach foreign companies, including OAO Gazprom, International Petroleum Investment Co. and China National Petroleum Corp., for rest of financing. "We've done market testing to see appetite among local banks," Saulat told Bloomberg in interview. "The signal we've got is that around $300 million can be raised from a local consortium."

Inter State Gas is responsible for completing gas pipeline by year 2014. Under June 2010 accord, Iran will provide about 21.5 million cubic meters of gas a day to Pakistan for 25 years. The period can be extended by five years and volumes may rise to 30 million cubic meters a day. Gazprom, International Petroleum Investment, an arm of Abu Dhabi government and CNPC have shown interest in the venture, Saulat said.

Gazprom may fund and help build 780-kilometer pipeline, Saulat said, but he declined to provide more details. Inter State Gas invited banks last month to help arrange funding and plans to seek bids for construction next month, Saulat said.

Pipeline will carry gas from South Pars field via Baluchistan to off-take point in Nawabshah, Sindh.

Source: Pak Tribune