The Iranian side of the $7.5-billion project is almost complete, but Pakistan has run into repeated problems paying for the 780 kilometre (485 mile) section to be built on its side of the border.
Last year, Pakistan had asked Iran for $2 billion in financing to build its side of the controversial gas pipeline.
Iran has the second largest gas reserves in the world but has been strangled by a Western embargo that has seen its crude exports halved in the past year.
US officials had earlier warned that the Iran Pakistan pipeline project would risk triggering sanctions aimed at Iran.
Federal minister for petroleum and natural resources Shahid Khaqan Abbasi told AFP on Tuesday that the work on the pipeline was not possible because it falls under the sanctions imposed by the US and EU.
"The work on the Pakistan Iran gas pipeline project is not possible because of the sanctions imposed by the US and EU," Abbasi said.
"This project is affected by the sanctions imposed," he told AFP without elaborating on how the sanctions could derail the project.
Iranian Oil Minister Bijan Zanganeh said that his country was ready to go ahead with the pipeline agreement.
"Iran is committed to this gas agreement but until Pakistan has not officially relayed its stance, we cannot react and make a decision," he was quoted as saying Tuesday by the Mehr news agency:
In late October Zanganeh had said he had "no hope" for the project, citing financial problems.
The long-delayed pipeline that would link the two neighbours was planned to ease Pakistan's chronic gas shortages.
Iran currently produces around 600 million cubic metres of gas per day, almost all of which is consumed domestically due to lack of exports. Its only foreign client is Turkey, which buys about 30 million cubic metres of gas per day.
The Karachi stock exchange took fright when the countries' then-presidents Mahmoud Ahmadinejad and Asif Ali Zardari inaugurated the much-delayed section of pipeline in March last year.
Spooked by fears of US sanctions, the main index slumped almost 2.5 per cent.
Pakistan has severe gas crisis as natural gas supply to homes and factories almost hit the dead end in winters and the consumers have to rely on the Liquid Petroleum Gas (LPG) cylinders.
The compressed natural gas (CNG), used as fuel in cars to improve environment and reduce cost also shuts down for three days a weak during the tight supply months in the most-populated Punjab province.
Many Pakistanis have converted their cars to run on CNG, depending on it as a cheaper alternative to petrol and diesel.
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@imran, they dont "spread Islam". They spread Wahabiism.
It is simple cost benefit analysis. We should avoid sanctions first. Gas can be imported from other sources but the export markets in the form of EU and US are not substitutable easily.
The Iran-Pakistan (IP) Gas Pipeline has always been a smoke screen. That is why PPP's regime under Asif Zardari enjoyed his complete tenure of 05 years and signed the controversial deal just before the completion of the PPP Government. There was no planning, no financing and no budgetary allocation for the pipeline. http://www.thenews.com.pk/Todays-News-9-97116-Pipeline-or-pipedream Even the agreed upon Tariff is also detrimental to Pakistan. Even Musharraf did not proceed on the IP pipeline project during his 09 years of one-man rule.
"aik Zardari sub pe bhari" .... he signed this during his tenure as GIFT to Next govt as he knew that by the time they reach to the level where Pakistan have to payback, he would be enjoying in his palace waiting for 5 years to complete. On the other hand PML was working closely as friendly opposition at that time so now they have to face all this....
Bowing down again to our Saudi masters?
How is it that Turkey buys gas from Iran without fear of Sanctions, maintains good relations with the US?
What business is of the US or Saudis if we want to ease our energy problems?
There are no sanctions against Pakistan to construct a pipe line. In six months the sanctions will be lifted against Iran and I guess that the construction period will most probably exceed six months.
Rex Minor
@Kiumars: @Gp65 @t
I have not posted on any other sites. I am curious where you found my name on other links. Anyhow I have quoted Dawn Newspaper website from Oct 23 last year. I don't think I can post a link here. Try searching" Iran gas pipeline not in favour of Pakistan: report" and you will find it. I did not post any other comparisons but if you like to check Natural Gas Prices in other parts of the world check out Wiki Page on "Natural Gas Prices" or search "South American gas prices. They range from 2.21 to 3.25 per mmbtu in South America. There are however some countries who pay higher prices (similar to 15 or even more in some cases). So what I mean to say is that USD 15 per mmbtu is on higher end of price range. And as a third world country with limited foreign reserves it is best to seek cheaper alternatives(which are available).
Goggi (Lahore), you the man!!
you the man! @goggi (Lahore):
Congratulations to all PMLN supporters...you guys earned this ;)
Pakistan is currently ruled by the civilian military duo Sharifs. There are no western sanctions on Pakistan to build a pipe line. The sanctions which are against Iran will be lifted in the next six months as soon as the five plus1 have been assured by Iran that its nuclear program is for peaceful purpose.
Rex Minor
Pakistan-US-Iran-Saudi mess getting murkier than Middle east mess in undersatanding.
MK said Turkmenistan is supplying gas to Japan at a rate of $4/ MMBTU. How does Turkmenistan export gas to Japan? By Air? I searched Google and found that you have posted this nonsense on many websites. Now tell me how Turkmenistan sends gas to Japan? Who sells gas at that price ($4/ MMBTU) when the cost of exploration and transport is more than that? Are you Jewish?
Joke is on Iran, they spent $7.5 Billion based on promise from Pakistani Govt., What were they thinking !!!
@MK: Please provide a source for your Turkmenistan-Japan claim. I can find nothing related to it which is not surprising because there is no such deal!
The price at which we were getting gas from Iran was good. Zardari only signed the deal. Negotiations have been ongoing since the 90s! Yes, it's a 2 decade old project that has still to be completed. It will never be built. We don't have the money to pay for it and we can't fight US sanctions either. Now we will have to pay penalties to Iran over this project.
The sanctions on Iran predate the sining of the Iran Pakistan pipeline agreement. Hence the claim that the pipeline cannot be built due to sanctions is untenable. Pakistan will have to pay penalties documented in the agreement hat it signed of its own free will if it refuses to buy gas as agreed.
@MK: Please provide reliable reference for the rate that Japan is paying. When was it signed? What were the oil rate at the ime that Japan signed its contract? Secondly, sovereign nations cannot walk away from contracts by saying that the earlier overnment signed a flawed contract.
We have switched to our conventional "pathiaN" long time ago..................... PathiaN are Buffalo´s and cow´s dried dung patties..........ECO-FRIENDLY AND PURE PUNJABI!