Lobbying: US lures Pakistan with cheaper gas than Iran

Published: January 25, 2012
A view of the winding Pak-Iran pipeline. PHOTO: FILE

A view of the winding Pak-Iran pipeline. PHOTO: FILE


They may loathe you for being ‘duplicitous’ in the war on terror, but they will gladly sell gas to you – especially if it means you will give up gas from Iran.

The United States has stepped up efforts to lobby Pakistan to abandon the Iran-Pakistan (IP) gas pipeline, and Liquefied Natural Gas (LNG) imports from Iran. What’s on offer? Cheaper gas from US.

US embassy officials held a meeting with stakeholders from the power and energy sector last Tuesday to seek input on Pakistan’s current LNG import and IP gas pipeline projects.

Expensive from Iran

Iranian gas will not be affordable for Pakistan, a participant from the meeting quoted US embassy officials as saying.

Iranian gas will cost $12 per million British thermal units (mmbtu) while LNG would cost $18 per mmbtu, the officials said, adding that the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline was the most viable option for Pakistan financially.

Minister for Petroleum and Natural Resources Dr Asim Hussain is presently in India to negotiate the transit fee for TAPI.

US officials expressed concern regarding the current gas crisis in Pakistan, and even asked the stakeholders for suggestion on how the US could help, but made no direct offers to bring LNG to Pakistan, sources said.

The main focus of the discussion was the TAPI gas pipeline and cheaper LNG imports, they added.

Cheaper from US

Sources said that officials from United States Agency for International Development (USAID), at a meeting at the petroleum ministry, had indicated that LNG could be made available at$4.5 per mmbtu.

When contacted, Secretary Petroleum Ijaz Chaudhry said that US has made no offer to provide LNG, but added that USAID gave a briefing two months ago on the historical trend of LNG prices in the world market.  The price of LNG was $4.5 per mmbtu four to five years ago but shot up due to rising LNG demand in Japan following the earthquake, he said, quoting US officials.

According to Wall Street Journal, American energy companies have increased gas supply to the point that prices have started to plummet. Natural-gas prices fell 5.7% on January 12, 2012 to their lowest level in over two years. Despite a 32% drop in prices, on-shore production rose 10% last year and is expected to rise another 4% this year, according to Barclays Capital.

Excess reserves

The US has six billion cubic feet of surplus gas per day that could be exported, an energy expert said, adding that further reserves of shale gas have also been discovered.

The US has potential to export LNG and is setting up two to three LNG terminals to start exporting possibly in 2015, the expert said.

He added that price of gas in US is around $4 per mmbtu and its transportation from US to Pakistan would add between $3 and $4 per mmbtu, the expert added.

The expert did caution though that in all likelihood, Pakistan would have to pay prevailing market rates in the region.

The US may move to export cheaper LNG, however, in order for Pakistan to abandon the IP gas pipeline project, he added.

Published in The Express Tribune, January 25th, 2012. 

Facebook Conversations

Reader Comments (51)

  • Quinterius
    Jan 25, 2012 - 9:40AM

    This is all wishful thinking on the part of the US. The idea of a pipeline through Afghanistan is a pipe dream. Pakistan would be stupid to abandon the gas pipeline from Iran that would provide it with steady supply of gas.


  • Jan 25, 2012 - 10:34AM

    It is very strange that a developed country, having best educated people like US’ did not have moral values and trying to force Pakistan for abandoning the Iran- Pak gas pipeline.Now our moral obligation is to stay firm and do not accept any dictation by US, because we have to stay here ‘near Iran.


  • Qasim
    Jan 25, 2012 - 10:45AM

    Pakistan should remember that Americans are best weather friends. Even if possible, the supplies can be turned off once their objectives are met.


  • faraz
    Jan 25, 2012 - 10:59AM

    Iranian gas seems the most feasible but US-EU won’t buy textile products made out of Iranian gas. Its not just an issue of economy, but foreign policy and global politics


  • adeel759
    Jan 25, 2012 - 11:15AM

    This is lot better than buying useless F 16s, Useless because they are programmed to not enter indian airspace in case of conflict. And Gas four time cheaper, wow.


  • justice to be done
    Jan 25, 2012 - 11:22AM

    These rulers/traitors will accept this deal for sure as us is putting all kind of pressures on them – we all know what kind of game is this memogate ! Soon they will resume nato supplies and abandon IP gas project. Hence we’ll happily live under us umbrella for ever ;)


  • Pinky
    Jan 25, 2012 - 11:28AM

    yeah right, so that you can suspend gas supply when we suspend your NATO traffic?? no, thanks..no deal

    give me “I”…give me “R”….give me “A”…..give me “N”…..


  • Salman Sheikh
    Jan 25, 2012 - 11:34AM

    They also lure us on Kerry-Luger bill now see what is the aftermath. Its rubble our economy. The foreign investors are just US pushovers and privatization our assets to them is just not helping it.


  • Rehan
    Jan 25, 2012 - 11:44AM

    We can use both :-)


  • TN, Advocate
    Jan 25, 2012 - 12:02PM

    US Geological Survey should offer Pakistan the same gravity survey, it conducted in Afghanistan to find out all the natural resources. Thus we may have an inventory of minerals, oil and gas reserves.
    I have knowledge that Pakistan has the potential of the largest uranium mine. YES SIR!
    Coal Bed Methane Gas (CBM) from Thar could easily provide 5 TCF; 50 million gallons of water.
    OUR GOVT SHOULD REQUEST THESE TWO FAVOURS FROM AMERICANS and lot of current problems could be solved.


  • Omer Khan
    Jan 25, 2012 - 12:09PM

    Whats the guarantee that one fine day, the US will not just stop the gas?


  • jamal
    Jan 25, 2012 - 12:11PM

    We don’t need cheaper Gas we need Cash money lolz.. Pak govt reply


  • Abdulleh
    Jan 25, 2012 - 12:25PM

    Pakistan should remember Iran is going to be their neighbor for a long time and Americans wil change their colour the second it suites their interest. They are a lot more firendly with India and only deal with Pakistan when they have to.


  • zubair khan
    Jan 25, 2012 - 12:32PM

    Shouldn’t our “Closet friend” have offered this far earlier, without any motive other than the positive development of Pakistan?


  • Jan 25, 2012 - 12:33PM

    Who is trusting USA? They r fair weather friend, they will leave us when nobody knows


  • Irtiza
    Jan 25, 2012 - 12:39PM

    Now it depends upon the commisssion. The party that offers more commission will be successful in selling gas to Pakistan.


    Jan 25, 2012 - 12:56PM

    They(USA) will stop the flow of Gas whenever they want to squeeze Pakistan for some or the other dirty job they want Pakistan to do for them.USA is is very good at it.


  • Rizwan
    Jan 25, 2012 - 12:59PM

    Iran is the only option .US will once again ditch PAKISTAN as they have been doing in the past .Wake up Pakistan


  • Cautious
    Jan 25, 2012 - 1:03PM

    I would be very ” cautious” about this given the US track record in reliability. Our policies and priorities change like the weather so I would not blame you guys for viewing this offer with suspicion.


  • You Said It
    Jan 25, 2012 - 1:06PM

    IP pipeline is anyway going to flounder and not get built. No foreign aid agency or company will finance the pipeline due to US sanctions. Even the Chinese have refused to provide technical consultation on the project. With the noose of sanctions tightening around Iran, there is no way to route payments for the gas even if we somehow do manage to get the pipeline built. And finally given the $12 per mmbtu price we negotiated after a hard bargain, we’d go bankrupt if we paid that rate for the gas. While the TAPI pipeline is a long shot, we should be looking at every avenue to fulfill our gas shortfall given the drop in our domestic production and absence of any god-given natural resources in the country.


  • Jan 25, 2012 - 1:23PM

    Americans always link trade with their politics. They may offer better conditions in the beginning
    but in the longer run they will use the gas supply to blackmail Pakistan. Trading with our neighbours is to our strategic advantage.Recommend

  • antanu g
    Jan 25, 2012 - 1:24PM

    and once pakistan abandons iran deal US will take a UTurn and stop the supply. Pak loses Iran and US both.


  • Ashraf P
    Jan 25, 2012 - 1:45PM

    America should sell cheaper dollars to Pakistan as a special case. 1 rupee per dollar – all you can take.


  • Parvez
    Jan 25, 2012 - 1:50PM

    We should first develop what we have underground. Why has this been put on a slow slow track.
    Who will pay the penalty for going back on commitment on the Pak-Iran pipeline project ?


  • Imran
    Jan 25, 2012 - 2:01PM

    We need independancy not dependancy. US isnt long-term solution. So should build the gas pipeline


  • fahd
    Jan 25, 2012 - 2:48PM

    i wish that electicity and gas load shedding start from diplomatic enclave in islamabad so that embassader of US in pakistan also has to wait for warm water in cold mornings and , cooked food in the evenings then he will surly gets his facts correct about the extreme requirment of energy in pakistan and stop giving us extra ordinary solution to our very basic problems


  • Jan 25, 2012 - 2:52PM

    we should never quit IP gas pipe line
    I hope Imran Khan will buy gas from Iran


  • ullo
    Jan 25, 2012 - 3:21PM

    No to US, Yes to IRAN….


  • Ajamal
    Jan 25, 2012 - 3:22PM

    Apart from developing indigenious reserves, Iran gas pipeline is the most obvious choice. Importing gas from US, while Paksitan is situated at the backyard of world’s largest energy exporters sounds rubbish!


  • Vigilant
    Jan 25, 2012 - 4:15PM

    Uncle SAM in action……farewell to IP gas pipeline project


  • sohaib
    Jan 25, 2012 - 4:43PM

    pakistan will be very stupid to abandon Iran pipeline. Pakistan must consolidate regional alliances. IT must not antagonize regional countries for US interests. If US is so inclined and obsessed with applying sanctions, it must begin with the biggest bully in the Middle East – Israel. Only then US policy in Middle East will become credible.


  • Hasan Mehmood
    Jan 25, 2012 - 5:15PM

    {Iranian gas seems the most feasible but US-EU won’t buy textile products made out of Iranian gas}
    Dont look so far ahead in future. We can possibly try to diversify our exports in the meanwhile.
    In any case if we dont get reliable gas (I do not consider USA gas reliable, it takes only one senator to move a resolution in Congress and get any support / aid suspended on ambiguous charges e.g slackness in WOT, Child Labour, Nuclear Prolification etc), there wont be any textiles to export.


  • Hasan Mehmood
    Jan 25, 2012 - 5:23PM

    {I would not blame you guys for viewing this offer with suspicion}

    I did not expect such a Pro Pakistan / Pro people statement from you.


  • Well wisher
    Jan 25, 2012 - 5:57PM

    I wish the “powers that be” seriously put their thinking hats on when making this decision. Don’t go further into debt Recommend

  • Ali Tanoli
    Jan 25, 2012 - 6:06PM

    Please dont make a ad hauk decissions pakistan we are in mess because of this…
    Iran is better than ten thousand milles away clever wolf.


  • antanu g
    Jan 25, 2012 - 6:49PM

    I think you always live in negativeness. Please dont come out of your home…there could be accidents.What rubbish.Its all economy my dear…if Pak textile is cheaper and have quality…every one would buy it.Its same with all the countries.


  • Cautious
    Jan 25, 2012 - 8:36PM

    Sounds like a win-win situation. Gas production in the USA is going up while the price is going down – natural gas is so cheap in the USA that some of the oil producers are burning it at the well head rather than incur the investment to transport it. Further — how lame does one have to be to use anther’s moniker?


  • Jan 25, 2012 - 8:53PM

    Lot of bravado, but guys, once the US and EU sanctions are in place it will be impossible to pay back the Iranians, without blacklisting your own banks and resources.

    There is no way Pakistan will be able to pay back the Iranians without repercussions from crippling sanctions. That is why EU is stopping its consumption of Iranian Oil. India is still continuing to buy them, but hey, its India. It has lot many more resources Pakistan can only wish for. .


  • Hasan Mehmood
    Jan 25, 2012 - 8:58PM


    Please refer to my earlier comments. Its not a simple issue of price. Anyway why cant USA find another market a bit nearer (say a couple of thousands mile?)

    We have been literally begging Americans to provide aid and technology in energy sector. They can very well assist us in Thar Coal Power Generation, Rehabilitation and Upgradation of our inefficient / aging power plants and Natural Gas Extraction etc. (if not nuclear power as provided to INDIA).
    BUT NO: USA wants to sell its surplus gas to Pakistan and obtain a very strong and vital leverage over PAK policies.

    Even for price there is no guarantee as per the following part of the article:
    {The expert did caution though that in all likelihood, Pakistan would have to pay prevailing market rates in the region}

    I am afraid my friend you are back to your old self.


  • mohammad naeem
    Jan 25, 2012 - 9:35PM

    If US had to offer gas with the business objective we would more than welcome it because ultimately we buy that gas against money but dictating us to spoil with our neighbour is not a business deal. we are direly in need of gas unintruptably and we cant afford to waste more time to get it anyway!


  • Cautious
    Jan 25, 2012 - 9:40PM

    @mohammad naeem. The USA govt doesn’t own a single well and it has to purchase oil and gas on the open market just like any other USA business. Any deal on gas is going to be between USA business people and Pakistan – the USA only facilitates the meeting.


  • TN, Advocate
    Jan 25, 2012 - 9:55PM

    Why we always look around and forget the resources available here?
    We have Thar coal field with plenty of Coal Bed Methane Gas, Balauchistan and KP definitely have large reserves of oil & gas. I have been associated with a couple of foreign companies in the energy sector and our government’s attitude keeps them away.
    Lets get our house in order and forget Americans, Iranians etc. All these countries have their own agendas.


  • mohammad naeem
    Jan 25, 2012 - 9:58PM

    @ we have no issue buying gas from US but we certainly make it on professional terms. And iran would be supplying us gas by 2013 and the pipelines work is done more than half so why should we abandon that! Should we?


    Jan 25, 2012 - 11:59PM

    (Any deal on gas is going to be between USA business people and Pakistan – the USA only facilitates the meeting)

    Please dont insult the intelligence of readers on this blog. Why then American business does not invest in Pak Energy Sector? And no I am not asking for a nuclear plant from a private American company. Without American Govt. nod and tacit approval and perhaps guarantees we cant even purchase BOEING PLANES. Its not so simple. Otherwise we would be rushing to get private deals signed with LOCKHEED / NORTHROP. We dont need American facilitation for the purpose. We can arrange travel / hotel accommodation and other requirements for meeting independent American Business men.
    Nice try on your part to pull wool over our eyes.


  • Chachabeenda
    Jan 26, 2012 - 1:12AM

    Sorry, US is not reliable. Its serves us to do biz in the area and right next door. Iran is not likely to impose any sanctions on Pakistan and those insistence we do business with the US really should mind their own business.


  • Moniker Steelers Penn !
    Jan 26, 2012 - 5:43AM

    Certain posters from way across now seem to sound all nice and sweat when it is about money. Thanks but no thanks!
    We dont have $$$ anyways to give you or anyone else , remember?


  • Wang Fei
    Jan 26, 2012 - 2:46PM

    Since when US LNG become 4.5/mmbtu? 4.5 sounds more like the pipeline gas price from Henry Hub. To arrive at LNG price landed in Pakistan, the price should be doubled or tripled.


  • Cautious
    Jan 26, 2012 - 3:57PM


    Please dont insult the intelligence of
    readers on this blog. Why then
    American business does not invest in
    Pak Energy Sector?

    The answer is simple – the same reason that other countries are not investing in your energy sector – the profit potential is not commensurate with the risk. Your own State own oil company won’t invest in exploration because the artificial price is set so low that they can’t make money. And lets not forget that once you produce the energy and sell it below market no one (including the govt) wants to pay there utility bills.


    Jan 26, 2012 - 10:38PM


    You make my job easier. If USA business does not trust business atmosphere in Pakistan, why would we trust USA to invest nevertheless just to spite IRAN a next door neighbor who would never ever sanction Pakistan. And who is trusting us with the security of gas pipe line.
    Please read the article heading and comment accordingly.
    THE KEY WORD IS “LURE” WHICH ALSO MEANS TEMPT. Now tell me exactly what USA is tempting Pakistan with? Surplus Gas which can be switched off any time? and most probably at market rates.

    If you had read my comments then you would know the answer. Prodding and prompting USA Business with assurances and guarantees to invest locally in Pakistan Energy Sector in spite of what you say is unfavorable business / security atmosphere, would have been a great act of friendly support earning our gratitude. Most probably Hillary Clinton was briefed on Pak needs in this regard a couple of years back, mumbled something like “Will look into it” and never got back.

    Being an Indian why would you try to thrust USA Gas down our throat when over 90% Pakistani’s are not comfortable with it?


  • Ahmed_USA
    Feb 7, 2012 - 10:11AM

    Lets not be emotional but rational, Pakistan should only look for its own benefits, Iran will not lower its prices for Pakistan, so why should Pakistan not seek cheaper sources. If the US can provide Pakistan with cheaper gas, then there should be a formal agreement, same period as that done with iran, for the next 20 years. I would trust the US more than Iran.


  • Ahmed_USA
    Feb 7, 2012 - 10:13AM

    Lack of energy in Pakistan is not the American ambassadors job, its is Pakistans job. In fact it is our duty to provide electricty and warm water to our guests, lets not become professional beggars, what you wrote is pathetic.

    Americans are not responsible for Pakistan, I say this as a Pakistani American who works hard, pays taxes and helps America gro wstrong, how much tax to you pay and how hard do you work?


More in Pakistan