Pak-Iran pipeline: Pakistan to continue pipeline project despite international pressure

The $1.5 billion Iran-Pakistan gas pipeline is vital to meet burgeoning energy needs of the country.

KARACHI: Pakistan will not be deterred by any pressure on a pipeline project which seeks to import much-needed natural gas from Iran, Petroleum Minister Shahid Khaqan Abbasi said on Monday, emphasising a stance that is now frequently being repeated by government officials.

The $1.5 billion Iran-Pakistan gas pipeline is vital to meet burgeoning energy needs of Islamabad, especially as domestic gas production has remained stagnant and other energy import projects have hit a stalemate.

“There is no fear of any sanctions. We are confident that the project will go through and we are pushing for it,” Abbasi told newsmen here.

“Iran is selling gas to Armenia and Turkey. When these countries can buy gas then so can we,” he said, refusing to acknowledge threat made by some high ranking US officials that any deal with Iran can bring economic restrictions.

The 1930km long pipeline will bring 750 million cubic feet per day (MMCFD) of gas to Pakistan

Beside the fear of US sanctions, the government also needs to arrange money for construction of pipeline part in Pakistan.

“The previous government has imposed a Gas Development Cess to raise that money. But Islamabad High Court struck it down. We are trying to solve that problem. But we are also trying to work on some interim arrangement,” he said without elaborating.

The other gas import project, which deals with liquefied natural gas (LNG), and considered quicker than constructing a transnational pipeline, has also hit snags. Efforts to import LNG have been in process for eight years now but clash of private interests often derails the initiative.

“We must realise how important this is. Cost of LNG was just $6 (per MMBTU) when work started and now it ranges between $15 and $18,” he said, adding that despite waste of so much time he was still in no position to give guarantee if the project will not fall prey to legal battles.

Certain measures have been taken to avoid the past experience when different groups vying to buy a long term contract for LNG supply complicated the project, he said. “Functions of supplying LNG and terminal have been changed. This is called the unbundling approach.”

More importantly, Abbai says government will chose the lowest bidder.

Pakistan Petroleum Limited’s discovery

Surrounded by green cottonseed and banana fields in district Sanghar, discovery of gas reserves in Shadad X-1 well has raised prospects for Pakistan Petroleum Limited’s (PPL’s) Gambat Block.

Speaking at the ceremony, PPL CEO Asim Murtaza Khan said there have been back-to-back discoveries of two wells in the block that will add 50 to 70 MMCFD of gas into the system in next ten months. “PPL will try to make sure that production of 70 MMCFD or more.”