With no country or company willing to take part in a project that the US opposes, Tehran has offered to lay the entire Iran-Pakistan (IP) gas pipeline project.
Pakistan has pitched investment proposals to China and Russia but no major progress has been made due to US pressure. Both countries had earlier offered to provide complete financing for the project in case the contract was awarded to them without a bidding process.
The project, if completed, will supply 750 million cubic feet gas per day (bcfd) of gas to the energy deficit country.
The US has warned Pakistan and companies assisting the project of possible sanctions if they go ahead.
State-owned National Bank of Pakistan (NBP) and Oil and Gas Development Company Limited (OGDC) walked away from the project last year. NBP feared branch closures in different countries while OGDC backed off after US-based investors threatened to withdraw its shares from the company if it associated itself with the project.
In March this year, the world’s largest bank Industrial and Commercial Bank of China Limited (ICBC) after agreeing to finance Pakistan’s side of the pipeline shied away after succumbing to US pressure.
Tehran offers to provide all the oil Pakistan needs
With a decline in supply of Iranian oil in the world market following ban imposed by US and European Union, Tehran has offered to provide all the oil Pakistan needs on a 90-day deferred payment.
“Iran has confirmed financing of $250 million on government-to-government basis and also expressed willingness to seek more finance from Iranian commercial banks,” a government official said quoting recent development made in Iran during negotiations between officials of both the countries. Pakistan seeks financing of over $500 million from Iran to finance IP gas pipeline project.
Modalities will be finalised during upcoming talks between the two countries scheduled in Islamabad.
“Pakistan is going to woo China again to help out with its finance constraints during the upcoming visit of President Asif Ali Zardari,” official said adding that Minister for Petroleum Dr Asim Hussain will accompany the head of state.
Iran is the second country to offer import in weeks as India recently agreed to meet Pakistan’s total import requirements, however, the deal did not go through as Pakistan is reluctant to over rely on its old foe and also rejected diesel import due to security reason.
“Pakistan may avail Iran’s offer to meet total oil requirements but there will be some hurdles like opening Letter of Credits (L/Cs) due to sanctions against the oil-rich country,” official said adding that oil imports from Iran could be possible through a third party. “Iran is ready to provide oil on a three-month deferred payment facility but it should be forward looking, otherwise the disparity between rupee and dollar could hurt us,” official said.
State-owned National Bank of Pakistan (NBP) and Oil and Gas Development Company Limited (OGDC) walked away from the project last year. NBP feared branch closures in different countries while OGDC backed off after US-based investors threatened to withdraw its shares from the company if it associates itself with the project.
Published in The Express Tribune, June 5th, 2012.