Iran refuses to slash gas export price

Delegation leaves to finalise pipeline construction plan.

Zafar Bhutta February 20, 2013
Iran has agreed to set up the largest refinery in Pakistan at Gwadar Port with a refining capacity of 400,000 barrels per day . PHOTO:FILE


Iran has firmly stuck to its stance and refused to bring down the price for gas export to Pakistan to match the price agreed for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, officials say.

Pakistan and Iran have already set the price at 78% of crude oil rate for 750 million cubic feet of gas per day to be transported through a pipeline from Iran’s South Pars field to Pakistan, commonly dubbed as Iran-Pakistan pipeline. However, according to an agreement, Pakistan has the right to renegotiate the price if it finds cheaper gas from some other source.

Under the TAPI project, Pakistan will pay 69% of crude oil price for import of 1.3 billion cubic feet of gas per day.

“Pakistan can enter into fresh talks with Iran for price revision after gas flow starts from alternative resources,” a senior government official said, promptly clarifying as gas supply from Turkmenistan has not started, “we cannot engage into negotiations with Tehran.”

Talking to reporters here on Wednesday, Adviser to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain disclosed that all technical matters for the award of gas pipeline construction contract to an Iranian company had been finalised. However, he cautioned that some financial issues still needed to be resolved.

A team of Inter State Gas Systems (ISGS) – which works on gas import projects – had to leave for Iran on Wednesday night to resolve these issues. “Construction contract will be signed in Pakistan,” he said.

Iran to set up largest refinery at Gwadar

In a positive development, Iran has agreed to set up the largest refinery in Pakistan at Gwadar Port with refining capacity of 400,000 barrels per day in a joint venture with oil marketing giant Pakistan State Oil (PSO).

“The two countries will ink an agreement on the refinery project during the visit of President Asif Ali Zardari to Iran on February 27,” Hussain said.

Pakistan and Iran agreed to establish the oil refinery during the visit of Iranian Energy Minister Rostam Ghasemi to Islamabad on Wednesday. The Iranian minister also offered to provide liquefied petroleum gas (LPG) to ease Pakistan’s energy woes.

According to sources, Iran will export 400,000 barrels of crude oil per day for the refinery. For this, it is interested in setting up an oil pipeline between the two countries.

Experts call the proposed refinery project a major milestone in the wake of handing over of Gwadar Port operations to China. The refinery will help meet oil needs of China as well.

Published in The Express Tribune, February 21st, 2013.

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Sandip | 8 years ago | Reply

It is foolish for Pakistan to be provoking the US in this manner. The moment anything substantive will happen on the projects, US will freeze PSO and others involved in these projects out of the financial system. That will mean that Pakistan will not even be able to purchase whatever oil and gas it is able to now. And that will mean that Pakistan will actually reach the stone age without a single bomb having been fired.

Virkaul | 8 years ago | Reply

Due to sanctions, Iran is desperate to sells it's oil and gas to any country. Oil refinery at Gwadar is a marketing tool to sell gas via IP pipeline. Both projects are long shots primarily because neither the US nor Saudi, who are the biggest donors to Pakistan would permit this. To add to this, Balochistan's political situation further complicates it.

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