Multibillion-dollar project: Progress on Iran pipeline project hinges on US talks

Islamabad to press Washington to exempt the project from possible sanctions next week.


Zafar Bhutta November 10, 2013
Progress on Iran pipeline project hinges on US talks. PHOTO: AFP

ISLAMABAD:


Pakistan will press the United States to exempt the multibillion-dollar Iran-Pakistan (IP) pipeline project from sanctions during the revised strategic bilateral dialogue, which kicks off in Washington on November 12.


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.

The Washington dialogue – which is a followup to Prime Minister Nawaz Sharif’s recent visit to the US – will focus on revising relations between the two countries, especially with regards to Pakistan’s energy needs.

The Pakistani delegation will be jointly led by Petroleum Minister Shahid Khaqan Abbasi and Power Minister Khwaja Asif.

Officials privy to the development told The Express Tribune that the delegation will raise the issue of possible US sanctions against the IP project because it is essential for meeting the country’s growing energy demands.



According to an analysis prepared by the petroleum ministry, replacing furnace oil used for power generation with gas imported from Iran will result in annual savings of $2.4 billion.

The officials said that progress on the IP project will depend on the outcome of the revised dialogue which would be the final round of deliberations on the issue.

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 – a charge denied by Tehran.

Instead the US has been urging Pakistan to go for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) project. US and European Union sanctions against Iran have also stalled progress on the IP pipeline since the country has not been able to import the technology needed to develop the South Pars gas field, the officials told The Express Tribune.

Meanwhile, the officials said that the Pakistani delegation will also discuss the possibility of striking a civil nuclear deal similar to the one the US has with India.

On the other hand, the US is expected to offer Liquefied Natural Gas (LNG) at cheaper rate in an attempt to discourage Pakistan from pursuing the IP project, according to sources.  Over the next few years, the US will emerge as a potential exporter of LNG after the discovery of shale gas reserves which have led to a decline in prices.


Published in The Express Tribune, November 10th, 2013.

COMMENTS (12)

No force majeure | 10 years ago | Reply

@unbelievable: They cannot claim force majeure because the sanctions were in place at the time that the contract was signed. So this was a pre-existing condition not an act of God

np | 10 years ago | Reply

@antanu: "@hasan: Please dont write “US” you are not a Pakistani…and you dont have any moral high ground to comment on issues when you yourself dont have the courage to disclose your true nationality"

Coming from you that is a joke. Everyone knows you are not an Indian and yet you continue to pretend to be one. Then you have the nerve to call out others. Height of hypocrisy.

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