China to build $2.5 bn worth LNG terminal, gas pipeline in Pakistan

Islamabad: China will soon start construction of a USD 2.5 billion terminal for liquefied natural gas (LNG) in the restive Balochistan province and the Iran-Pakistan gas pipeline under the ambitious China-Pakistan Economic Corridor project, a senior official has said.

The LNG terminal will be set up in Gawadar in Balochistan province while the pipeline will bring gas from Iran to central Pakistan.

Mubeen Saulat, managing director of state-controlled Interstate Gas Systems (ISGS), told media that the Chinese will be awarded contracts for the two projects by November when the construction work on the two projects is expected to start.

"Chinese state firm China Petroleum Pipelines Bureau (CPP) has submitted technical and commercial bids," said Saulat.

The terminal will have the capacity to handle 500 mmcfd (million cubic feet per day) of LNG and a floating storage gasification unit.

"The dual projects will be completed at the cost of about USD 2.5 billion, 85 per cent of the investment will be done by the Chinese company while government of Pakistan will provide 15 per cent of equity," he Saulat.

The CPP will be financed through a loan by the Exim Bank which Pakistan will repay in the coming years.

He said that the security aspects of the two projects were already taken care of and Pakistan will provide security for the pipeline and terminal while the camps of Chinese workers will be secured by a Chinese security firm.

South western province of Balochistan is facing a low-level insurgency since 2004 by Baloch nationalists who want greater control over mineral resources. The law and order situation has been compounded by the presence of Taliban militants who often attack security forces and civilians.

The two projects are part of the China-Pakistan Economic Corridor which is a USD 46 billion project to link Pakistan with western China and includes several energy and infrastructure projects.