Vietnam’s vast wind power potential

A giant wind-farm off the south coast is one of more than 150 wind power projects planned in Vietnam; the 1GW Vinh Phong project will be funded by a Russian-Belgian JV, but Hanoi needs to improve its clunky electricity grid so renewable projects can be fully incorporated in coming years

(AF) A plethora of international players are beating a path to Vietnam to take part in its renewables ramp-up – the largest in Southeast Asia – which includes both solar and onshore wind and now even an offshore wind project development.

The most recent to show interest includes Russian state-owned oil and gas producer Zarubezhneft and Belgian marine contractor DEME Offshore.

The two signed a memorandum of understanding (MoU) to build the proposed Vinh Phong project. It is a 1-gigawatt (GW) offshore wind farm proposal with a cost of $3.2 billion. Vinh Phong is located in southern Vietnam, northeast of Ho Chi Minh City, the country’s business hub.

The two partners look to commission the first phase of the project, with 600-megawatts (MW) worth of capacity, by 2026, prior to a second phase with a further 400MW capacity by 2030. If plans hold tight, it could be Vietnam’s first offshore wind farm and it is anticipated that more will follow.

Zarubezhneft said it will share investment costs with a specially formed investment vehicle called DEME Concessions Wind. Under the MoU, the two firms will get oil and gas producing venture Vietsovpetro and DEME Offshore to manage the construction process.

Vietsovpetro, a joint venture between Zarubezhneft and state-run PetroVietnam, already operates several offshore oil and gas blocks in Vietnam.

Zarubezhneft

Zarubezhneft set a goal of entering both the wind and solar sector in Vietnam, Cuba, Southern Europe and Russia. These plans, not surprisingly, suffered setbacks due to the onset of the Covid-19 pandemic last year and a subsequent pullback in global oil prices amid the worst slump in demand for oil ever, which caused a drop to multi-year lows. However, global oil prices have recovered, with the global oil benchmark, London-traded Brent crude, now hovering above $70 per barrel, with price appreciation and forecasts that demand will increase for the rest of the year.

Vietnam’s clean energy transition

Zarubezhneft’s disclosure comes as Vietnam undergoes systemic changes in its energy sector. This stems from a forecast natural gas supply shortage that will impact its power generation capacity with potential brown and black-outs, mostly earmarked for the more populated south. However, Covid-19 related economic contraction has pushed that forecast back at least a year or two.

Vietnam’s energy quandary also stems from steady economic growth and more energy consumption, as well as geopolitical interference. Over the past several years, China has prevented PetroVietnam and its foreign partners from developing natural gas resources in Vietnam’s own UN-mandated 200 nautical mile exclusive economic zone (EEZ) in the South China Sea, a problem not dissimilar to that faced by the Philippines.

To offset this supply shortage, Hanoi initially focused on developing more liquefied natural gas (LNG) infrastructure. Currently, two LNG import terminals are being constructed in the southern part of the country. With at least six more approved, and possibly more considering projects pending approval at various provincial levels. Vietnam also has as many as 22 LNG-to-Power projects in its soon to be released Power Development Plan 8 (PDP8), to 2030 with guidance to 2045.

Over 150 wind projects proposed

Vietnam has marked advantages in its renewables ambitions over many of its neighbors in the region. It is including a vast coastline of some 3,260 km (2,030 miles), excluding islands. It is ideal for both offshore and near-shore wind-power development. By way of comparison, only around 3% of neighbouring Thailand’s land mass has suitable wind speeds needed to drive turbines, which greatly hinders the country’s capacity to develop wind power.

Vietnam’s solar radiation in most parts of the country is also ideal for solar project development. And it has contributed to its quick build-out, which seems to have peaked last year.

Much of the country’s recent success with solar can also be attributed to Hanoi approving generous feed-in-tariffs (FIT). These tariffs encourage investment in renewable energy by guaranteeing an above-market price for producers. Since they usually involve long-term contracts, FITs help mitigate the risks inherent in renewable energy production.

Tax exemptions to reduce investment risks

The government has also approved FITs for its wind-power development, with those tariffs up for review at the end of October. It also offers various tax exemptions to reduce investment risks.

Yet, Vietnam’s wind power development pales in comparison to its solar build-out. By the end of 2020, wind power accounted for just 1% (670MW) of the country’s energy mix. It is compared to 16.6GW for solar, including rooftop solar, according to the US Energy Information Administration (EIA). Under PDP8, the next power development plan, the country aims to ramp-up solar capacity to 18.6GW and wind capacity to 18GW by 2030. Vinh Phong, for its part, is one of as many as 157 wind farm projects proposed in Vietnam.

Three weeks ago, the Asian Development Bank (ADB) signed a $116-million loan with three Vietnamese firms to finance the construction and operation of three 48MW wind farms, totaling 144MW, in the central province of Quang Tri.

The projects will increase Vietnam’s wind-power capacity by as much as 30%, helping it to also offset the country’s still troubling reliance on coal needed for power generation. Coal still makes nearly 40% of the country’s energy mix, and that figure looks likely to remain steady until to at least the middle of the next decade.

The ADB’s move three weeks ago was its first wind-power project in Vietnam and comes just a month after the bank said it would stop funding most fossil fuel projects in the region, even natural gas, under most scenarios.

Electricity grid needs urgent improvements

However, as promising as Vietnam’s renewables build-out is, several problems remain, including power grid curtailment. Simply put, the country needs new transmission and distribution infrastructure to accommodate additional capacity and transmit the new power to where it’s needed.

The problem is already being felt by a number of power projects that have had to curtail production since transmission lines are already operating at capacity. Especially in areas where there is a concentration of solar power. This has resulted in less electricity being produced, less revenue earned and an inability of some project backers to service debts incurred to build projects.

Similar problems – depending on each location’s specific grid development – could see otherwise bankable wind power projects, (onshore, near-shore and offshore) unable to obtain necessary funding to go forward.

But the Vietnamese government is now starting to address this problem. It recently  adopted a new law that improves and prioritizes grid development. And grid development is now a priority in the draft PDP8, the first time it’s been included in the country’s PDP.

However, expanding grid capacity is both capital and time intensive. Build-out times can range to as much as five years or more. Other countries are also confronting similar situations when building renewable power projects, including heavyweights such as Germany and the UK.

There are some short-term solutions for grid congestion, however, such as utility scale battery storage, grid enhancing techniques, plus topology optimization software. All of these improve grid resilience and reliability, and prevent bottlenecks, but the long-term solution is still expanding Vietnam’s transmission grid.

How Rosatom built a huge 150 MW wind farm

How much more is planned in the near future?

In the second half of 2020, Rosatom built a wind farm, unique in its scale. It is in Adygea, which became the largest in Russia and one of the largest in Europe.

Russia is considered to be a fan of traditional hydrocarbon energy. This is true given the huge reserves of natural gas, oil and coal in the depths of the country and on the continental shelf, mainly in the richest Arctic zone.

However, in recent years, Russia has been investing heavily in the creation of large facilities in the field of alternative renewable energy. 

One of these facilities is the Adyghe wind farm. 

The construction of wind energy facilities in Adygea was carried out on a land plot with an area of ​​14 hectares. In total, Rosatom has installed 60 facilities. Each wind turbine is 150 m high and rated at 2.5 megawatts. 

In total, all 60 wind turbines generate energy with a capacity of 150 MW.

The length of one blade is 50 m, and each object weighs over eight and a half tons.

The blades for the Adyghe wind farm were ordered several years ago in India, but since 2020, such blades have been produced in Russia at the Ulyanovsk plant, which has already shipped the first batch of domestic blades for wind power facilities in Denmark.

The new wind farm in Adygea can generate about 350,000,000 kWh annually.

The commissioning of only one of this wind power plant allowed to increase the volume of electricity generation in the entire Republic of Adygea by 20%

It is important that Rosatom does not stop at the development of alternative energy facilities. 

So recently, a large wind farm with a total capacity of 86 MW was built in the Ulyanovsk region, and very soon a huge wind farm will be built in the Stavropol Territory.

In terms of its size and production capacity, it will surpass the new Adyghe wind farm and will generate annually up to 210 MWh.

An equally large alternative energy facility, which is being built in the Republic of Kalmykia, is on its way. 

And the largest wind farm until 2023 is planned to be built in the Astrakhan and Rostov regions. They will generate 350 MW each year.

The cost of building each of these huge wind farms is estimated at 30,000,000,000 rubles.

For comparison, the largest wind farm in Europe, built in the UK in 2013, generates about 630 MW.

Generally # plans Rosatom for the construction of wind farms is very ambitious. In the next two years alone, Rosstat plans to build and commission wind power plants with a total capacity of over 1 GW.

Why Rosatom’s new laid-down reactor is the safest in the world, and when will it enter series

Russian giant Rosatom is rightfully considered the world leader in nuclear energy and a number of other high-tech areas, as evidenced by an extensive portfolio of foreign orders

Rosatom was the first to master the serial production of the latest modern third generation fast breeder reactors. 

Now our concern has begun construction of the world’s first power unit of the next generation – the fourth.

A new power unit is being built in the city of Seversk in the Tomsk region. 

The installation was named Brest OD 300.

The new reactor operates on fast neutrons and has a lead coolant.

Rosatom considers this # type of reactor to be completely safe. Accidents like Chernobyl and the Fukushima disaster using the Brest reactor are excluded.

The new reactor was based on the principle of natural safety. 

Foreign competitors of Rosatom do not possess such technology and continue to build thermal neutron reactors in which water serves as a coolant.

The advantage of fast reactors is the ability to reuse spent nuclear fuel as new fuel, thereby achieving a closed cycle. 

In addition to being economical, fast reactors are safer than existing thermal reactors. The possibility of unpredictable and uncontrollable acceleration of neutrons is excluded, which is equivalent to the loss of the coolant. 

The risk of a parazirconium reaction that provoked the disaster at the Fukushima nuclear power plant is also excluded. 

The work on the design of the fourth generation reactor has been carried out by Rosatom since 2010. Rosatom plans to commission the Brest power unit by the end of 2025.

One of the important advantages of the new reactor will be its ability to run on fuel # uranium 238, which is much cheaper and more widespread on our planet, in contrast to the rare uranium 235.

In the next few years, Rosatom plans to organize the serial production of the newest Brest reactors in Russia, and after 2030 start exporting them to foreign partners. 

Are Poland and Hungary ready to invest in the NPP in Kaliningrad?

Potential Polish-Hungarian-Russian cooperation on the completion and subsequent joint operation of the Baltic NPP (nuclear power plant) could solve some of Poland’s energy problems

Expert of the Polish analytical center Polityka Insight Robert Tomashevsky released information that claims to be a sensation. According to him, Hungarian Prime Minister Viktor Orban and one of the richest Poles, media mogul Zygmunt Solozh-Jacques intend to invest in the completion of the Baltic nuclear power plant in the Kaliningrad region. As a reminder, this project was initiated by Rosatom, the construction start ceremony took place on February 25, 2010. It was assumed that the nuclear power plant, worth 6.23 billion euros, would make the Kaliningrad region an exporter of electricity. 

However, after Poland and Lithuania refused to buy its products in 2014, construction was suspended. According to Tomashevsky, the Hungarian MVM group, which is responsible for the modernization of the Paks nuclear power plant operating in Hungary, and the ZE PAK concern owned by Solozh have expressed their readiness to invest in the Baltic NPP.

“The main argument in favor of the construction of the energy bridge and the Baltic NPP is the accelerating energy transformation, due to which in the coming years it will be necessary to stop most of the Polish coal-fired power plants, which will lead to an increase in demand for energy imports,” the expert explains the motivation of the Polish side. But, given that nuclear energy works at the intersection of business and politics, and the second is almost more than the first, the question arose how the Polish authorities would react to the project, which implies entering into a dialogue with their Russian counterparts. Tomaszewski reports that Solozh allegedly discussed this idea with Polish Prime Minister Mateusz Morawiecki and Minister of State Assets Jacek Sashin. Whether it is true or not, it is difficult to say, government representatives have not yet provided their comments. But neighboring Lithuania twitched.

Lithuanian Energy Minister Dainius Kreivis said in an interview with the Lithuanian business portal Verslo Žinios that “the information about the construction of a nuclear power plant in the Kaliningrad region with the participation of Polish and Hungarian companies either does not correspond to reality, or is part of an information war waged by Russia.” The Lithuanian minister believes that Polish officials in charge of energy, primarily the strategic energy infrastructure commissioner Piotr Naimsky, adhere to the position that after the synchronization of the power systems of Poland and the Baltic republics, the import of energy from third countries, including Russia and Belarus, is impossible. It used to be like that. And now?

Poland in recent years has taken a number of decisions in the energy sector, which contain a turbulent political charge. First, it is expanding its LNG reception infrastructure (mainly from the United States) and is building its part of the Norwegian-Danish-Polish gas pipeline Baltic Pipe. Secondly, it adopted a program for the construction of Polish nuclear power plants. Thirdly, it agreed with the green course of the European Union. In each of these directions, Warsaw is facing side effects that could force it to correct its previous positions. The Green Deal sets ambitious targets for drastic cuts, with a view to bringing greenhouse gas emissions to zero. For Poland, this means that it first of all needs to find a replacement for its coal-fired power plants, in other words, to stop mining coal and switch to alternative energy sources.

By and large, there are two options here – gas and nuclear. Renewable energy sources will not cover the needs of the Polish economy. Warsaw in both cases relied on the Americans. But this was relevant during the presidency of Donald Trump, because in addition to the business component, the ruling Polish Law and Justice Party (PiS) hoped to derive political added value from such cooperation with the United States. Apparently, this will not be possible with the Joe Biden administration, which is why Polish experts and analysts suggest considering alternative projects. For example, to abandon the previous plans to build nuclear power plants with the Americans, betting on France.

However, in any case, Poland is still far from the appearance of its own nuclear power plants, while coal generation should be stopped in the coming years. Projects for enhancing the gas component in the country’s balance sheet are facing internal resistance, and the nuclear component – with external ones. Recently, American lobbyists for the Troyemorye initiative, represented by former US ambassadors to Poland Daniel Fried (1997-2000) and Georgette Mosbacher (2018-2021), and senior analyst of the Atlantic Council Jan Brzezinski, made an article focusing on the creation of Eastern Europe has a developed gas infrastructure, primarily LNG terminals, in which Germany is simply obliged to invest in order to “reduce the risk associated with Nord Stream 2”.

In this situation, potential Polish-Hungarian-Russian cooperation on the completion and subsequent joint operation of the Baltic NPP could solve some of Poland’s energy problems. In this case, Warsaw gets the opportunity to replace part of the coal-fired generation with “atomic electricity”. The claims of Germany are withdrawn, which is protesting against plans to build Polish nuclear power plants near its borders. In addition, nothing prevents the Polish authorities from entering into negotiations with Rosatom on the prospects of creating Polish nuclear power plants by its forces. This will not in the least hinder Poland’s political maneuverability, just as the construction of the Akkuyu nuclear power plant in Turkey does not prevent Ankara from arguing over a number of important problems with Moscow. Of course, if Law and Justice starts a dialogue with Russia in the atomic sphere, opponents of the ruling party will get another opportunity to accuse it of “working for the Kremlin.” But, on the other hand, the opposition is doing it this way today. So there isn’t much to lose PiS here, by and large.

July 6, 2021 Stanislav Stremidlovsky

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EURASIAN COUNTRY NEWS REVIEW – Turkey

This is beginning of new section of Eurasia News Online – Country News Review – Turkey

Turkey’s first publicly owned FSRU project inaugurated

With 110 million cubic meters of storage and 28 million cubic meters of gasification capacity, Turkey’s first publicly owned floating liquefied natural gas (LNG) storage and gasification vessel (FSRU) will add significant flexibility to Turkey’s energy supply chain security, according to Energy and Natural Resources Minister Fatih Dönmez.

Speaking at the inauguration ceremony of the Ertuğrul Gazi in the southern province of Hatay on June 25, Dönmez said the vessel had the highest gasification capacity among the existing FSRUs in the world.

With speedy integration to the grid system and its ability to mobilize quickly, the ship can be quickly dispatched to regions where it is needed to operate resource points in areas of high consumption, Dönmez noted.

It will undertake its first ship-to-ship LNG transfer on June 29, he confirmed.

The vessel will help ensure that Turkey’s record of uninterrupted power supply will continue. It will be able to meet 8.2 percent of the daily natural gas capacity supplied to the grid system.

Turkey’s first FSRU was launched in the Aegean province of İzmir’s Aliağa district in December 2016 at a time when the country needed extra gas capacity to meet increased consumption due to the very cold weather conditions.

The Ertuğrul Gazi FSRU is owned by Turkey’s state-owned crude oil and natural gas pipeline company, Botaş.

It will connect to facilities in Hatay and meet the annual household energy demand of the provinces of Hatay and Osmaniye.

Turkey imports around 45 billion cubic meters of natural per year, paying approximately $12 billion to pipeline exporters Russia, Azerbaijan and İran, as well as LNG suppliers, including Qatar, Nigeria, Algeria and the United States.

Nearly a third of the country’s gas needs are met with LNG supplies.

New discoveries in the Black Sea are expected to provide as much as 30 percent of the gas Turkey’s $730 billion economy requires when plateau production is reached, which is targeted for 2025.

Discoveries are also expected to allow Turkey to import cheaper gas and trim the annual average energy bill of around $44 billion.

Source:


Turkey’s mega Istanbul Airport busiest in Europe June 10-24

Istanbul’s mega airport, Istanbul Airport, was the busiest in Europe between June 10-24, according to official data.

Data from the European Organization for the Safety of Air Navigation (Eurocontrol) shows that the state-of-the-art airport hosted the highest number of flights with an average of 764 daily flights during the period. This was a 12% increase over the previous two-week period.

Amsterdam’s Schiphol Airport took second place on the list with 733 daily flights.

Sabiha Gökçen Airport, Istanbul’s second international airport and located on the metropolis’ Anatolian side, ranked 6th with an average of 582 flights per day. It increased its flights by 16%.

Even with all of the restrictions being implemented in 2020 due to COVID-19, Istanbul Airport still ended up as the busiest airport in Europe in terms of passenger numbers with 23.4 million travelers. The newly built facility surpassed London’s Heathrow and Paris’ Charles de Gaulle, which followed Istanbul with 22.3 million and 22.1 million, respectively.

Meanwhile, Turkey’s flag carrier, Turkish Airlines (THY) has now reached over 1,000 flights a day for the first time since COVID-19 struck, the carrier announced Saturday.

The airline operated 1,065 flights on Friday, June 25, leaping 23.4% from June 4, when it had announced a 15-month daily flight record, according to a Turkish Airlines statement.

Source:

China turns to Turkmenistan for gas

By Chris Gill and Jim Pollard

 

Australian exports of LNG look set to tighten amid tension between Beijing and the Morrison government over multiple issues. It is despite big investments by Chinese oil majors in recent years. Beijing looks to source more natural gas from Turkmenistan via a new pipeline

(AF) Turkmenistan may have a golden opportunity to supply Beijing with more natural gas via a new pipeline, following the slump in relations between China and Australia.

Senior Turkmen officials were in China recently and are said to have discussed further cooperation on natural gas.

But such a move in Central Asia could ruffle feathers with Russia, which is also piping gas to China. It is a bad news for Australian firms exporting liquefied natural gas (LNG) to the same destination. Australian LNG shipments are worth 64-billion-yuan a year (about US$10 billion).

Recently two Chinese LNG importers were told to immediately suspend LNG imports from Australia. Trade with Chinese oil majors that have invested billions in gas projects Down Under has not been affected so far. And given just these two smaller natural gas importers have received the notice, some US media outlets have suggested that this is only a ‘test’ by the Chinese government.

Deteriorating relationship with Australia

It is another shot across the bow at Canberra as ties with Beijing continue to deteriorate. The bilateral relationship is clearly in bad shape. The lowest point in decades for sure.

The Labor Party’s Shadow Foreign Affairs Minister Penny Wong said on Tuesday Prime Minister Scott Morrison was so focused winning a domestic political advantage he did not seem to “fully comprehend Australia’s interests in relation to China. The first job of national leaders is the safety of their citizens. Our leaders do not make us safe by beating the drums of war with China,” Wong said.

Part of the problem stems from the fact a Federal election will be staged late this year or in early 2022.

Chinese media kept the needle at Morrison’s belly. They are reporting that there will be a “smooth transition” when the country abandons Australian natural gas, while China and Turkmenistan cement ties with an US$8 billion pipeline and more plans afoot.

Turkmenistan is the second largest country in Central Asia and has a population of 5.6 million. A landlocked country that shares borders with Iran, Afghanistan, Uzbekistan, and Kazakhstan. It is playing a key role in China’s Belt and Road scheme.

Data from China’s Ministry of Commerce shows the country imported about 101 million tons of natural gas for an estimated 231.4 billion yuan (about US$36 billion) last year. Imports rose by 5.3% year-on-year, while the money spent decreased by 19%, mainly because natural gas prices fell during the Covid-19 pandemic. Of the LNG imported by China last year, the proportion of imports from Australia accounted for 46%. It is valued at about US$10 billion (about 64.3 billion yuan).

China regards Turkmenistan as a long term partner in the natural gas field

On May 10, the two deputy prime ministers of Turkmenistan visited Xi’an for talks with Foreign Minister Wang Yi, who emphasized that “China regards Turkmenistan as a long-term partner in the natural gas field”. This little-known landlocked state is the world’s fourth-largest in terms of its proven natural gas reserves. Later, the two parties agreed to consolidate and expand cooperation in the natural gas field.

Work has been continuing on the D line – a fourth line linking to the Central Asian pipeline. The high-level meeting between China and Turkmenistan likely means that it will come online soon.

Expert’s view

Professor K Paik, an expert on Sino-Russian oil and gas cooperation, said China had made a big effort to boost the economics of the natural gas supply from Central Asia. The academic, who is in the process of setting up a Sino-Russian Energy Forum, told ATF China wanted Turkmenistan gas to enable a total of 85 bcm/y of gas to be sent via Uzbekistan and Kazakhstan – with 15 bcm/y via Pipeline A, the same amount via Pipeline B, plus 25 bcm/y via Pipeline C and 30 bcm/y via Pipeline D.

CNPC paid all the bills for the latest pipeline development. Together with its three domestic trunk pipelines (West-East Pipelines 1, 2 and 3).
“China had difficulty in getting full capacity of pipeline gas from Turkmenistan a couple years ago when the gas supply shortage became a serious problem in China. The core point was Turkmenistan was not happy about the low gas price for their exports. On the other side China was not happy about the burdensome gas price for their imports.

Paik said Turkmenistan is introducing a new gas market by accelerating the TAPI Line. It is with their own investment for 85% of the line’s construction.
“In my view, this is the mistake Turkmeni authority made with regard to construction of the D Line. A pipeline passing through Afghanistan without a proper security protection will be a huge liability. Consequently, Russia saw the opportunity to accelerate its own initiative by promoting a Mongolian route. From Gazprom’s view, Russia’s west Siberian gas supply to China via the Xinjiang route has to compete against Turkmen gas. But the Mongolian route will enter into China’s Bohai Bay gas market at a stroke.”

Reasons for worry in Australia

China’s three big national oil companies – PetroChina, CNOOC and Sinopec – have all invested in the LNG industry in Queensland in northeastern Australia. CNOOC is a partner in Shell’s Curtis LNG project. Sinopec buys the bulk of the LNG from Origin Energy’s Australia Pacific LNG.

PetroChina is a 50-per-cent partner with Shell in the $10 billion Arrow gas venture. It started its first phase about a year ago.

So, with big long-term deals a fair proportion of Australia’s LNG trade with China would appear to be relatively steady.

Natural gas, like iron ore, is one of Australia’s cornerstone industries. Australia’s annual LNG exports account for about 10% of total exports. So, if China, as the largest importer of Australia’s natural gas, only stops importing 30% or so, it could cause some hair pulling.

The writing seems on the wall that Australian LNG exports to China will see diminishing demand.

Russia & Pakistan agree to build gas pipeline from Karachi to Lahore

Russia has signed a deal with Pakistan to build a major gas pipeline linking the nation’s southern port of Karachi to industrial hubs in the north. The deal is set to be the biggest between Moscow and Islamabad since the 1970s.

Russia’s Energy Minister Nikolay Shulginov and the Pakistani Ambassador, Shafqat Ali Khan, signed a revised agreement on the project in Moscow on Friday, opening the way for the start of construction in the near future.

Spanning more than 1,100 kilometers, the pipeline dubbed the ‘Pakistan Stream’ is expected to have a discharge capacity of up to 12.3 billion cubic meters of natural gas per year, according to the Energy Ministry’s statement.

The pipeline would connect liquefied natural gas terminals in Karachi and another port city, Gwadar, with power plants and industrial hubs in Pakistan’s northern region of Punjab, which includes the city of Lahore.

Both nations “put a major effort” in preparing the amendments to the deal. The signing of the agreement would allow them to begin construction “as soon as possible.” The deal would “help Pakistan strengthen its energy security and increase its reliance on natural gas as an eco-friendly energy source.” 

Last year, a Pakistan official told Bloomberg that the construction could start as early as June. However, officials in Russia have not confirmed this information yet. The project, which has an estimated cost of $2.25 billion according to the Pakistani media, would involve the establishment of a Special Purpose Vehicle (SPV) company operated jointly by Pakistan’s Inter State Gas Systems and several Russian firms, including the TMK – a company that is one of the world’s leading steel pipe suppliers for the oil and gas industry, doing business in Russia, the US and Canada, among other nations.

Under the agreement, Pakistan would reportedly own 74% of the stakes in the pipeline operator while Russia would have the remaining 26%. The initial agreement on the pipeline construction was signed back in 2015 but it was then reviewed.

The project is set to become the biggest infrastructure deal between Pakistan and Russia since at least the early 1970s, when the Soviet Union built the Pakistan Steel Mills industrial complex at Port Qasim, near Karachi.

“The Pakistan Stream remains a flagship project in bilateral cooperation between Russia and Pakistan and both nations give priority to this issue,” Shulginov said.

Oil tankers park in a terminal at a port in the Pakistani city of Karachi