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Pakistan going ahead with IP pipeline, despite US coercions
The US $7.6 billion gas pipeline deal aims to export a daily amount of 21.5 million cubic meters.
The US$ 7.6 billion gas pipeline deal, which was signed in June 2010, aims to export a daily amount of 21.5 million cubic meters. PHOTO: FILE
TEHRAN: Despite US pressure to desist from entering into an energy deal with Iran that would help lessen a mounting gas crisis, it seems Pakistan will be honouring its committment as work surges on the Iran-Pakistan gas pipeline, Iran state regulated Press Television reported on Thursday.
Iranian Press TV reported that construction work on the pipeline till Iran’s border has been completed. And that the survey for the remaining feasibility on Pakistan’s land has concluded as well.
Pakistan is bearing losses due to energy crises and it would go ahead with different options including Iran,” The Nation quoted a Pakistani official as saying on Thursday.
The Pakistani source added Islamabad had not backed down from its trade agreement with Iran.
On December 19, high-ranking Islamabad diplomats said the administration of Barack Obama is frustrated with the “rapid progress” of Pakistan’s gas project with Iran, and is exhausting all its resources to sabotage the deal.
“They (US officials) have gone to the extent of threatening President Asif Ali Zardari of economic sanctions if work is not stopped immediately,” the official said.
Zardari, however, reportedly dismissed the threats, bluntly asserting that the commissioning of the project is vital and inevitable for the well being of Pakistan’s “fast crumbling” economy.
Earlier last week, Pakistan’s largest bank National Bank of Pakistan (NBP) and the country’s largest exploration company Oil and Gas Development Company Limited (OGDC) refused to finance the project. NBP had its branches in different countries of the world and therefore it feared that these branches could be closed due to US sanctions against Iran. Whereas OGDC, already cash constrained due to the huge circular debt, said that its US investors, having a 1.6% share in the company, had threatened to retreat if the company financed the IP gas pipeline project.
The US $7.6 billion gas pipeline deal, which was signed in June 2010, aims to export a daily amount of 21.5 million cubic meters (or 8.7 billion cubic meters per year) of Iranian natural gas to Pakistan.
Iran and Pakistan finalised the details of the deal during bilateral talks held in Tehran in October 2007.
In addition to exporting gas to Turkey, Armenia, and Pakistan, Iran is currently negotiating gas exports to Iraq.
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Reader Comments (27)
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Don’t worry, the US can still exert pressure through Wahhabi-aligned militant groups like the LeT, JUD, Sipah-e-Sahaba, Al Qaeda, Taliban etc. Washington is spoiled for choices here. Expect a couple of pipelines to be targeted.
As for Pakistan’s gas and fuel dilemma, is that any concern of our Washington “ally”?
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Pakistan has at least 63 trillion cubic feet of shale gas reserves, according to US Energy Information Admin. The best long-term option is to accelerate development of shale gas extraction in Pakistan. Pakistan should agree to pay $6.50/Btu for shale gas to investors compared with $12.30/Btu for gas imports from Iran, according to a report by Platts.
http://www.riazhaq.com/2011/05/pakistans-vast-shale-gas-deposits.html
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We need energy and we need it soon. Good news but will our dear rulers be able to keep the momentum till it reaches a logical conclusion?
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Pakistan is bankrupt, cannot pay for Iranian gas anyway.
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Pakistan’s enemies would love to see Pakistan fail economically. (Learn from the Soviet Union’s fate). It is absolutely vital that the IP pipeline construction is given the highest priority. innovative ways of funding the project locally and/or with the time tested friends must be utilized. Work on it on 24/7 basis to complete the project on minimum time scale.
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This too is going to end badly.
At least PAK has another new good friend in Iran.
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I think we have no other option besides IP pipeline. But how will we pay for this gas
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What’s with the contrasting reports on the IP pipeline every other day — it’s happening, it’s not happening, it’s surely happening, there’s no chance of it happening… I get the impression that Pak’s top energy officials are teenage girls plucking the petals of a flower “We love the IP pipeline, we love it not…”
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Zardari is not only doing everything bad, but the goods too.
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If the US does not want bankrupt and economically crumbling Pakistan to buy gas from its only viable option, why doesnt the US itself provide a viable solution immediately?
Such a solution would be,
1. providing Pakistan discounted LNG
2. Build out Pakistan’s shale gas extraction capability
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It should have been started in 2006…
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Why the hell are we importing gas from Iran when we have enough reserves in the country? Where will it find the money to pay for the gas?Recommend
@Econ 101 Student:
What interest would the US have in doing that?
You have good friends in Iran and China which I am sure will lend PAK all the funds it needs to have both the pipeline and the gas that will flow through it.
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Country’s Economy that has taken a nosedive needs energy to be functional. With the economic machinery capable of generating the gas energy to move forward, it should be able to pay for itself given what ever length of time. This should be the fastest way to get the economy functional on fast track. After all the Pakistani nation must survive through the fastest economic option available to them.
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For once this Govt. has developed SPINE and has started saying NO to USA
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Pakistan does not have much time left to stand up and by any means generate energy for economic devopment and daily functioning of businesses. A lot has been lost already and it is far beheind than what it used to be. This is more a practical issue and not political.
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This article is lacking in new information. We already know the banks won’t touch this project. So how will the government of PAKISTAN handle things? This project will NEVER be implemented.
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@Abdussmad,
The U.S banks will finance this project,,
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@Ali Tanoli:
You are assuming a lot. The American banks are not as stupid as the American government.
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Pakistan cannot stay hungry and ragged for too long. It has to survive and make a leap into building and healing the energy crisis. Energy undependence is a big lift and First come, First served. Pakistan’s economic well being will be a positive for others too.
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Energy crisis is ruining our economy, environment and well being. Factories are closing and even local investors are thinking of shifting their businesses to Bangladesh and other countries. There is massive deforestation as people are cutting trees like no tomorrow to use the wood for cooking, this alone is contributing to massive health issues, and there is evidence that deforestation is reason for drought, floods and fills ours dams with mud resulting in low electricity production. Not to mention that vehicles running on gas are cost effective and greener than one running on patrol or diesel. In short whether we like it or not we have to do something about energy crisis, before it is too late. When people have jobs that generates revenue and gas can pay for itself, think about that. And if we run this project efficiently other countries may join this project.Recommend
But CHINA has shown interest in funding this project.
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@saif:
No it has not shown any interest rather has pulled out of the coal project as well.
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We as a nation suffer from a very short memory so I don’t think anyone will remember that Benazir Bhutto wanted to have this pipeline started in 1988. When her Govt. was dismissed by the Establishment, one of the allegations against her was the Iran gas deal. The establishment felt that the pipeline was a security risk to our country. If anyone disbelieves this, just read Ghulam Ishaq Khan’s address at the PPP dismissal. There were no sanctions on Iran at the time and we would have made arrangements before the shortfall hit us.
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@Ali-wali:
Everything you wrote is true or probably true but the people of PAK chose to build a bomb and to invest in energy. They believe the bomb is there future and not gas.
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US Ambassador Cameron Munter has been advising Pakistan that not a good idea to invest in the IP pipeline while the world is increasing sanctions on Iran. With this latest US bill to sanction Iran’s Central Bank having passed the US Senate 100-0 and Obama having signed this bill, Pakistan needs to realize that a time may come in a few month when Pakistan would have to choose between doing business with Iran or doing business with the US and probably others such as EU.
By delaying the IP pipeline, Pakistan can be helpful in bringing further financial pressure on Iran. As Iran recently asked for resumption of nuclear talks with G5+1, there is hope that sanctions are working and Iran can reassure the world regarding their nuclear program and sanctions can gradually be lifted.
In the mean time, invest in domestic production and/or LNG regasification terminal. BTW, US has heavily invested in fraking for gas extraction and now considering exporting LNG.
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@Mard-e-Haq: Yet the commanders of these terror groups have all acknowledged that they get support from the ISI. Funny world, this. The US says Pak supports terrorism, Pak says US supports terrorism. It seems that everyone is holier than the other in their own regard…
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