Pakistan going ahead with IP pipeline, despite US coercions

The US $7.6 billion gas pipeline deal aims to export a daily amount of 21.5 million cubic meters.


Express December 30, 2011

TEHRAN: Despite US pressure to desist from entering into an energy deal with Iran that would help lessen a mounting gas crisis, it seems Pakistan will be honouring its committment as work surges on the Iran-Pakistan gas pipeline, Iran state regulated Press Television reported on Thursday.

Iranian Press TV reported that construction work on the pipeline till Iran’s border has been completed.  And that the survey for the remaining feasibility on Pakistan’s land has concluded as well.

Pakistan is bearing losses due to energy crises and it would go ahead with different options including Iran,” The Nation quoted a Pakistani official as saying on Thursday.

The Pakistani source added Islamabad had not backed down from its trade agreement with Iran.

On December 19, high-ranking Islamabad diplomats said the administration of Barack Obama is frustrated with the “rapid progress” of Pakistan's gas project with Iran, and is exhausting all its resources to sabotage the deal.

“They (US officials) have gone to the extent of threatening President Asif Ali Zardari of economic sanctions if work is not stopped immediately,” the official said.

Zardari, however, reportedly dismissed the threats, bluntly asserting that the commissioning of the project is vital and inevitable for the well being of Pakistan's “fast crumbling” economy.

Earlier last week, Pakistan's largest bank National Bank of Pakistan (NBP) and the country’s largest exploration company Oil and Gas Development Company Limited (OGDC) refused to finance the project. NBP had its branches in different countries of the world and therefore it feared that these branches could be closed due to US sanctions against Iran. Whereas OGDC, already cash constrained due to the huge circular debt, said that its US investors, having a 1.6% share in the company, had threatened to retreat if the company financed the IP gas pipeline project.

The US $7.6 billion gas pipeline deal, which was signed in June 2010, aims to export a daily amount of 21.5 million cubic meters (or 8.7 billion cubic meters per year) of Iranian natural gas to Pakistan.

Iran and Pakistan finalised the details of the deal during bilateral talks held in Tehran in October 2007.

In addition to exporting gas to Turkey, Armenia, and Pakistan, Iran is currently negotiating gas exports to Iraq.

COMMENTS (27)

Hussain Syed | 9 years ago | Reply

@Mard-e-Haq: Yet the commanders of these terror groups have all acknowledged that they get support from the ISI. Funny world, this. The US says Pak supports terrorism, Pak says US supports terrorism. It seems that everyone is holier than the other in their own regard...

thughes218 | 9 years ago | Reply

US Ambassador Cameron Munter has been advising Pakistan that not a good idea to invest in the IP pipeline while the world is increasing sanctions on Iran. With this latest US bill to sanction Iran's Central Bank having passed the US Senate 100-0 and Obama having signed this bill, Pakistan needs to realize that a time may come in a few month when Pakistan would have to choose between doing business with Iran or doing business with the US and probably others such as EU. By delaying the IP pipeline, Pakistan can be helpful in bringing further financial pressure on Iran. As Iran recently asked for resumption of nuclear talks with G5+1, there is hope that sanctions are working and Iran can reassure the world regarding their nuclear program and sanctions can gradually be lifted. In the mean time, invest in domestic production and/or LNG regasification terminal. BTW, US has heavily invested in fraking for gas extraction and now considering exporting LNG.

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