KARACHI: Work on a $2.5 billion Karachi-Lahore gas pipeline will start from July and talks on Iran-Pakistan gas pipeline will be resumed next month, Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi said on Wednesday.

The 1,100km Karachi-Lahore pipeline, capable of carrying 12.4bcm (billion cubic metres) gas a year, will connect LNG terminals in Karachi with consumption centres near Lahore. The project, which will be called North-South Gas Pipeline, is expected to be completed by December 2017.

Under a commercial agreement signed between Pakistan and Russia in October 2015, Moscow would provide a loan of $2bn in return for the award of the contract to its state-run firm RT Global, an arm of Russia State Corporation.

Speaking at an event organised by Bakri Pakistan to mark its 10 years of presence in the country, Mr Abbasi said that despite a plunge in international crude prices, oil firms had no reason to worry as prospects are bright in the long run.

But he reiterated that LNG was the only cost-effective solution for the country’s energy problems.

He said Pakistan and Iran would begin talks next month on the gas pipeline in the wake of lifting of international sanctions against Tehran.

The United Nations, European Union and the United States earlier this month lifted crippling economic sanctions on Iran after it agreed to curtail its nuclear ambitions.

The minister has also recently said that global oil price rout has made LNG economically viable for consumers at home, adding that the price of LNG delivered in Pakistan now works out at around $5.50 per million British thermal units (mmBtu).

His estimates were based on price offered by Russian firm Gunvor at 13.37pc of Brent for five years and then matched by Qatargas for 15 years.

Bakri Pakistan plans to merge two oil marketing companies, Bakri Trading Company Pvt Ltd and Overseas Oil Trading Company Pvt Ltd, established in August 2005. These companies are “in the advance stage of merger”, the company said in statement.

The merged company would then be listed on the Pakistan Stock Exchange through an initial public offering (IPO), which is expected by the end of 2017, Bakri’s Group Company CEO Hussain Al Shammaa told Dawn. However, he said it is too early to say how much money the IPO is expected to raise.

Key business of Bakri Pakistan, a 100pc foreign investment of Saudi Arabia’s Bakri International Energy Company, includes procurement of black and white oil products from local and international suppliers, storage and supply of petroleum products to its retail outlets and power generation companies.

The company, which has over 300 retail outlets, has established storages and terminals at Port Qasim, Machike and Shikarpur over the years. It further plans to develop storage points at Daulatpur, Mehmood Kot and Sihala. Its under-construction terminal at Shikarpur is planned to be operational during this fiscal year.

Published in Dawn, January 28th, 2016