Pakistan’s Inter-State Gas System (ISGS) and China National Petroleum Corporation (CNPC) have signed a preliminary agreement to build a 700 kilometers gas pipeline to be laid down from Gwadar to Nawabshah, in Pakistan, at the cost of $1.35b, local newspaper The News reported.

The project will be constructed with 85% financing from CNPC while the government of Pakistan will provide the remaining 15%.

China Petroleum Pipeline Bureau (CPP), a CNPC group company, will be building the pipeline and will also construct the liquified natural gas (LNG) terminal at Gwadar with a capacity of 500mmcfd, according to Natural Gas Asia.

Pakistan plans to extend the Gwadar-Nawabshah pipeline to the Iranian border as part of the Iran–Pakistan (IP) gas line. The pipeline when it is connected with Iran will economically become more feasible as the said pipeline will transport the gas of 750mmcfd from Iran and 500 from LNG terminal. Later on Iran will increase the gas export up to 1b out of which 250mmcfd gas will be earmarked to cater to Gwadar.