International law expert says move will help Tehran and Islamabad avoid looming US sanctions. PHOTO: AFP/FILE
Pakistan and Iran may convert their agreement on the gas pipeline project into a ‘bilateral treaty’ to avoid being hit by US sanctions.
Such an option will be discussed at the upcoming meeting of experts from Tehran and Islamabad, sources privy to the development told The Express Tribune.
They said that international law expert Ahmer Bilal Soofi had proposed turning the IP gas pipeline agreement into a ‘bilateral treaty’ as sovereign acts – as opposed to commercial transactions – were beyond the preview of the punitive US curbs.
Islamabad has previously made an unsuccessful attempt to seek a waiver from Washington but the Obama administration had refused to give any assurance in this regard.
Now that the first option of a US waiver has been ruled out, sources said, the two sides might discuss the possibility of converting the gas pipeline project into a bilateral treaty.
During a recent visit to Tehran, Pakistani officials had asked their Iranian counterparts to resolve the issue of possible US sanctions that has led to the delay in the implementation of the project and created hurdles in generating funds.
Already, Pakistan had expressed reservations over possible sanctions on the project due to tensions between Iran and the US.
“We cannot move on with the project unless the issue of possible US sanctions against IP gas pipeline project is resolved,” said an official, citing a message conveyed by Pakistani authorities to the Iranian authorities. For its part, however, Tehran blamed the delay on Pakistan.
The Pakistani side feels that with the US government having already listed the National Iranian Oil Company (NIOC) as a proscribed entity, its involvement with the project may not only invite US wrath in the shape of sanctions, but can also trigger similar EU curbs.
“Pakistani company Interstate Gas Systems (ISGS) working on IP gas pipeline project may also face US sanctions if it continues to work on the project,” an official said.
An energy expert said Pakistan should have avoided the inclusion of penalty clause, which says Pakistan will have to pay $3 million per day in case it fails to implement the project by December 2014. He said Pakistan should have built the IP gas pipeline project to the border as Iran had done but no progress was made.
“Now Pakistan may also face arbitration by Iran if it does not implement the project,” he said adding that Islamabad had given sovereign guarantee and was therefore bound to implement the project. He said Pakistan should again move a case before the US administration saying that the IP gas deal with Iran was signed before the sanctions and therefore qualified for a waiver.
Sources close to the development said that foreign office was involved in foreign policy with the US and it hoped to get a waiver from possible sanctions but it had failed to get it so far. The foreign office had been pushing during the past regime to move ahead on the IP gas pipeline deal.
According to a report prepared by petroleum ministry, if the furnace oil based power generation is replaced with imported gas, it will result in an annual savings of US$ 2.4 billion. It also said the incremental impact of the price of IP gas will be just 20% in the overall country’s average gas basket price if 750 million cubic feet per day (mmcfd) gas is imported.
Published in The Express Tribune, December 22nd, 2013.
COMMENTS (13)
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Indians, stop commenting on Iran-Pakistan relations. Stop being jealosu of Pakistan and Muslim relations. Get a life.
IP Iran-Pakistan Pipeline must be build whatever the cost, must not care outside political pressure usa & compagny are not from the region will never hold the ground 2014 is end game for them
Each time Pakistan mentions "Pipe", Saudi tells it to "pipe down"
Still beating a dead horse? If you can save $2.4 billion by switching to gas why not get off your duff and get an LNG terminal built - there is a Wordwide surplus of natural gas and a surplus of LNG tankers.
Whatever will be thought up next to convince Pakistani’s and the rest of the world that the pipeline is nothing more than a pipedream!
Three weeks back ET was reporting “secret” “friendly country” was going to put down a billion dollars to finance the pipedream. Today ET is reporting a tactically brilliant plan to make this into a “bilateral treaty” which somehow is going to befuddle the American’s into not imposing sanctions!
The bottom line remains that all the convoluted stories on schemes of keeping alive the possibility of purchasing Iranian gas is just drama by Pakistan to extract the best deal from its Sunni Arab and American patrons. Problem for Pakistan is that her Sunni Arab and American patrons are in no mood to either call off the threat of punishment if Pakistan purchases Shia Persian gas nor are there prepared to succumb to Pakistani blackmail and pay out a ransom to have Pakistan renege on the deal.
I dont know what the issue is why america has given 9 countries concessio of doing oil trade then why it is stopping Pakistan from doing india china korea and 6 countries are busy in fullfilling there energy needs through iran
I am related to the energy industry and i have a feeling we are loosing time to do any project a day lost in completion of dam gas plant, power plant will cost our industry to suffer lossess
Why are they continuing to kick a dead horse ? Iran has withdrawn financing for the pipeline and Pakistan is as usual bankrupt. This pipedream needs to disappear fast so the nations can put their energies into some feasible and productive.
Bilateral treaty perspective should also have been discussed.
"An energy expert said Pakistan should have avoided the inclusion of penalty clause, which says Pakistan will have to pay $3 million per day in case it fails to implement the project by December 2014." ++++++++++++++++++++++++++++++++++++++ Ex Pres Zardari will foot that bill. Dont worry.
Mr Imran Khan Pls also stop NATO supplies till US lifts the threat of ASanctions from IP +++++++++++++++++++++++++++++++++++++++++++ You alone can save Pakistan.