Gas import: Iran to lay Pakistan’s portion of pipeline

Workin­g commit­tee formed to finali­se terms of agreem­ent.

ISLAMABAD: Avoiding pressure from the United States, Pakistan and Iran have committed to press ahead with the gas pipeline project and constituted a joint working committee to finalise a deal for laying Pakistan’s portion of the pipeline by Tehran.

Iran has also offered to set up an oil refinery in Pakistan. Earlier, it had discussed a plan to lay an oil pipeline to Gwadar where a refinery would be set up to process crude oil.

Until one and a half years ago, two Pakistani refineries had been importing Iranian crude oil on three-month credit, but supply stopped afterwards as banks showed reluctance to open letters of credit following imposition of US sanctions on Tehran.

According to sources, these developments came during two days of talks in Islamabad, which concluded on Wednesday.

Sources told The Express Tribune that Iranian authorities reiterated their resolve to provide technical and financial help for constructing the gas pipeline.

“A joint working group has been formed to consider different options for Iran to lay the pipeline,” a source said, adding Tehran had already committed to provide $250 million and was willing to arrange more financing through Chinese commercial banks.

“The working group will also discuss the option of financing offered by Iran,” the source said. German-based firm ILF has completed detailed engineering design of the pipeline and according to an interim feasibility report, the project will cost $1.2 billion to $1.5 billion.

“If local companies participate in the project, the cost will come down and if foreign firms undertake the venture the cost will go up. There is also an option under which local and Iranian companies will join hands to complete the project,” the source said.

“Though Iran is an option to strike deal on government-to-government basis, we are also discussing the construction of the pipeline with China and Russia,” he said.

Meanwhile, the Pakistan-Iran joint committee on oil, gas and energy held a meeting on July 17 and 18 in Islamabad to discuss bilateral cooperation in oil and gas sectors.

The Iranian team was headed by Dr Ahmad Khalidi, Deputy Minister of Internal Affairs, Ministry of Petroleum while Pakistani team was led by Abid Saeed, Additional Secretary Ministry of Petroleum and Natural Resources.

The Iranian side expressed its intention to invest in hydrocarbon exploration and production including upstream and midstream sectors. It also invited Pakistani companies to invest in oil and gas exploration and production in Iran.

Published in The Express Tribune, July 19^th, 2012.