US curbs feared: Pakistan to tell Iran IP project not implementable

Published: January 19, 2014

Delegation will leave for Tehran by end of January to convey the message. PHOTO: AFP/FILE

ISLAMABAD: 

Pakistan has decided to formally convey to Iran that a multibillion-dollar gas pipeline project cannot move ahead due to possible US sanctions.

A Pakistani delegation would leave for Tehran by the end of this month to convey to Iranian officials there that a threat of US sanctions was the major stumbling block in implementing the Iran-Pakistan (IP) gas pipeline project, sources told The Express Tribune.

“The Foreign Office has given the go-ahead for conveying this message to Iranian officials,” said an official privy to the development.

On Thursday, the Foreign Office convened an inter-ministerial meeting where it was observed that Pakistan has failed to garner funds due to a threat of US sanctions. Even friendly countries like China have backed out from funding the project.

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The meeting – which was attended by representatives from the ministries of law, finance and petroleum – agreed that Iran should be told that possible US sanctions were the major stumbling block in generating funds for the project.

On December 9, 2013, Petroleum and Natural Resources Minister Shahid Khaqan Abbasi led a delegation for talks with Iranian officials. This was the first interaction between Islamabad and Tehran on the project since the change of governments in the two countries in mid-2013.

During that meeting, Pakistan raised the issue of possible US sanctions against the IP gas project. The Pakistani side wanted to renegotiate the agreed gas price and the construction contract. But they came to know that it was difficult to implement the project amid threat of US sanctions.

Both sides agreed that experts from both countries would meet to resolve the issue of sanctions. Now, after the inter-ministerial meeting, experts from both countries will meet in Tehran by end January to discuss a way out.

Though Iran has signed a nuclear deal with the US and other Western powers, Washington has announced that it has not changed its stance on the IP project.

A Pakistani delegation, led by the ministers of petroleum and water and power, visited Washington in the second week of November last year and requested US officials to exempt the IP pipeline from sanctions. However, the US officials were non-committal.

Pakistan had requested Iran to finance the laying of entire pipeline, estimated at $2 billion. Earlier, Iran had committed $500 million and in response Pakistan had pledged to award the construction contract to the Iranian firm, Tadbir Energy. However, Iran backed out and the contract to Tadbir Energy was terminated.

Published in The Express Tribune, January 19th, 2014.

Reader Comments (11)

  • JSM
    Jan 19, 2014 - 12:05PM

    Pakistan need not worry. USA is signing a deal with Iran and pressure on Pakistan will be off. Pakistan will get their pipe line.

    Recommend

  • Np
    Jan 19, 2014 - 1:09PM

    Why did Pakstan sign the contract in March? They were told in no uncertain terms even at that time that the sanctions would apply. Nothing has changed since the contract was signed, so Pakstan as no excuse to blackout from the contract without paying te penalties documented in he contract.

    Recommend

  • Asad Khan
    Jan 19, 2014 - 2:08PM

    @Np:
    …the contractual penalties outweigh the penalties which followed by sanctions.

    So, Pak either have to terminate the contract or arrange finances from a third source to finance the project cuz Iran has told Pak that she will not fund the Pak side of the line.

    The bright side, if Pak manages to fund the line then Pak will be in much better position to see US right in the eyes.

    The Dark side, Iran & Pak suffer from US hegemony. On this issue, Iran can do jibes on this in her local politics & Pak will receive rotten tomatoes in her local politics.

    regards,

    Recommend

  • 4j1th
    Jan 19, 2014 - 3:54PM

    Iran cancelled loan because Iran and India going to build and deep sea pipeline.Recommend

  • Jan 19, 2014 - 5:47PM

    After NATO withdrawal, Pakistan will lose the one and only trump it had with supply routes.

    I don’t see a single reason US will go easy on Pakistan, especially considering so many debacles of the past, with the most wanted man in America being found next to a military cantonment.

    There is a possibility of considering Economic sanctions on Pakistan, too, after 2014.

    Recommend

  • unbelievable
    Jan 19, 2014 - 5:50PM

    So what’s holding you back from importing LNG? Same thing that is holding your back from building a pipeline – no money. If you were serious about your energy shortage you would have built a LNG terminal and secured LNG contracts years ago – but you do nothing but talk – some of the exporters of gas won’t even bother replying to RFP’s anymore because they never go anywhere.

    Recommend

  • Ali Tanoli
    Jan 19, 2014 - 6:35PM

    Dig the mountain and found poor mouse hahahahahahaah

    Recommend

  • ModiFied
    Jan 19, 2014 - 6:55PM

    Not US, Saudi curbs feared…

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  • Bakhtiyar Ghazi Khan
    Jan 20, 2014 - 2:51AM

    The rate was too high coming from Iran. Gas from the Arab Gulf is much cheaper. Also considering Iran’s bad relations with the Muslim world and its alliance with India, this may have been the correct decision.

    Recommend

  • Asad Khan
    Jan 20, 2014 - 3:23AM

    @4j1th:
    Dude, India did not even completed the land one let alone a deep sea one, lol.

    India uses Iran & China as a bargaining chip to get maximum from US & right now this policy seems to be working fine.

    regards,Recommend

  • Amir Warraich
    Jan 21, 2014 - 5:34PM

    Pakistan leadership have again allowed US and Saudi pressure to sabotage cooperation on the IP project. No surprise, really. No wonder Pakistan is slipping more and more into an eternal abyss of failed states. With this kind of leadership there is no need of external enemies.

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