Despite international attempts to isolate Russia economically, Pakistan wants to complete a Russian-built gas pipeline as the US ally explores for solutions to alleviate a local energy shortage.
A contract with Russia to build the multibillion-dollar Pakistan Stream pipeline is “nearly done,” Finance Minister Shaukat Tarin told the Financial Times. The “North-South” project will carry liquefied natural gas from Karachi, Pakistan’s southern port city, to the country’s north.
“To carry LNG from the south to the north, we need a gas pipeline.” In the next two or three years, that will be practically crucial for us,” he said. “Either there’s a better option for us, or we’ll proceed with this agreement…” As of today, this is the best option, and it was clearly done before Ukraine.”
Despite public pressure from the EU, UK, and others, Pakistan, a Western ally throughout the Cold War and the post-2001 “war on terror,” has failed to criticize Russia’s invasion of Ukraine. Imran Khan, Pakistan’s prime minister, said he “regretted” the fighting but wished to stay impartial.
Islamabad has grown closer to Moscow in recent years, partly as the government seeks to strengthen energy security and believes that jeopardizing relations with Russia would be too costly. While Pakistan generates gas, it has recently begun to purchase from the Gulf as its energy needs have grown.
Russia’s energy industry is also important to the EU, which imports around 40% of its gas from the nation. This year, the group intends to reduce imports by two-thirds.
Pakistan’s connection with Russia, on the other hand, runs the danger of hurting ties with the West. On the same day that Russia invaded Ukraine last month, Khan paid a visit to Moscow. It was the first time a Pakistani prime minister has visited the country in in over two decades.
In a UN General Assembly vote, the EU, UK, Australia, and others “urged” Pakistan to denounce Russia. Pakistan voted no, with Khan criticizing western countries for treating Pakistanis like “slaves” at a campaign rally.
Following Khan’s visit to Moscow, Tarin expressed hope that Russian authorities will visit the nation soon to finalize the contract for the Pakistan Stream project. The pipeline, which will be built by a group of Russian firms, is expected to cost more than $2 billion.
Pakistan was already dealing with a widening current account deficit and double-digit inflation, worsened by rising global commodity costs, far before the recent spike in oil and gas prices. Pakistan started a contentious $6 billion IMF programmed to stabilize the country’s balance of payments and boost government income earlier this month.
Tarin, on the other hand, believes the fighting has created a new “crisis” that would raise the cost of imports such as oil and wheat, which Pakistan previously got from both Russia and Ukraine. Unless Washington unlocks alternative energy supplies, higher costs as a result of the US restriction on Russian oil and gas imports will hit Pakistan “quite severely,” he warned. About a quarter of Pakistan’s import bill is made up of energy.
He went on to say that if the US and Iran reach a nuclear deal, Islamabad would be able to resume work on a pipeline that would transport gas straight from Iran to Pakistan, which has been halted due to international sanctions. “If a deal can be made…”
Tarin stated that people should appreciate Pakistan’s “neutral” approach since it is “only fair.” “For a long time, the west has been our allies.” We’re paying attention to them, but we told them, ‘Listen, we don’t take sides.’ “As much as China and others, we’re with you,” he continued.