Pakistan-Iran gas pipeline: No decision on shelving IP project, says minister

Says threat of sanctions limits Islamabad’s options.

Reuters November 09, 2013
Pakistan is committed to building a multibillion-dollar gas pipeline from Iran but the threat of international sanctions makes the task difficult. PHOTO: AFP/FILE


Pakistan is committed to building a multibillion-dollar gas pipeline from Iran but the threat of international sanctions makes the task difficult, Petroleum Minister Shahid Khaqan Abbasi said on Friday.

The comments follow remarks last month by Iran’s oil minister that the country would probably abandon the contract, prompting speculation that the two sides had decided to ditch the project altogether.

“There is no decision to shelve anything, there is no decision to delay anything, but the constraints remain,” Abbasi told Reuters in an interview.

The $7.5-billion project has faced repeated delays since it was conceived in the 1990s to connect Iran’s giant South Pars gas field to consumers in Pakistan and India. Pakistan has pursued the pipeline as a way of alleviating severe energy shortages that have sparked violent protests and crippled the economy.

At the same time, Islamabad badly needs the billions of dollars it receives in US aid. The United States has steadfastly opposed Pakistani and Indian involvement in the project, saying it could violate sanctions imposed on Iran over nuclear activities Washington suspects are aimed at developing an atom bomb. Iran denies this.

“There are constraints with the construction of the pipeline,” Abbasi said. “There is a threat of sanctions, either US or UN, and probably EU also.  That limits what options we have with the construction of the pipeline. “We are really hopeful that construction should start soon, as soon as these issues are resolved.”

India, unlike Pakistan, quit the project in 2009, citing costs and security issues - a year after it signed a nuclear deal with Washington.

Pakistan, for its part, has made little progress on its section of the line for lack of funds and warnings it could be in violation of US sanctions on Iran.  “The moment we connect the gas, the sanctions hit,” Abbasi said. “We can construct the pipeline right up to the last metre, but the moment we connect, the sanctions are coming.”

Iran has spent hundreds of millions of dollars and nearly completed the 900-km pipeline to the Pakistan border.

Published in The Express Tribune, November 9th, 2013.


Sodomite | 8 years ago | Reply

@Raj - USA: You are absolutely right. That's why ours is called the Goberment of Pakistan. Get it??

Raj - USA | 8 years ago | Reply

Repeated news every other day, without any substance but full of contradictions, makes me wonder if Iran has already issued notice to Pakistan that it shall be invoking the penalty clause. These sanctions are not new and were very much there when Zardari signed the agreement with Iran. Zardari even inaugurated the construction of the IP pipeline with much fanfare. Pakistan has said many times that they shall go ahead with the pipeline, come what may, even if they have to face any sanctions. Pakistan was able to pay off $5.5 billion (PKR 500 million) to clear the circular debts and was able to construct the Metro Bus Project at a cost of $300 million. Yet, Pakistan has not spent / allocated even one dollar on the IP pipeline to date.

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