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

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

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.

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Reader Comments (12)

  • Np
    Nov 10, 2013 - 9:38AM

    When the contract was signed there was a lot of bravado – we don’t care if there are sanctions; we will make the pipeline at any cost. So had you not figured the cost of sanctions at that time? Also there are going to be no sanctions until the pipeline is constructed, so you should build the pipelne and by that time looking at the current softening of stand on both US and Iran side there maybe no sanctions. But the truth is that is not what Pakistan wants. Pakistan has no funds to build the pipeline and wants to blame US for its ongoing energy crisis which US is in no way responsible for. By now every one has figured out Pakistan’s tricks which is why the minister for Iran said that this project is a no Go. The only people who are being fooled by this ongoing commentary are Pakistani people – not the Americans, not the Iranians nor the Saudis. Bhasha dam is another one of those projects which has been inaugurated multiple times without achieving financial closure or even completing a proper feasibility study.

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  • hasan
    Nov 10, 2013 - 9:39AM

    aother round for us beggars in US

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  • Ali
    Nov 10, 2013 - 10:43AM

    How unfortunate we are having US puppet govt (PML-N) can’t take a single decision which will benefit our beloved country. The party self claim Lions, a million dollar joke.

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  • Sajjad
    Nov 10, 2013 - 10:52AM

    If you beg from someone you’ve to obey their orders! US and Iran are blood enemies and US would never want Iran to export gas and earn profit. Bahana ab ye government sanctions ka bana rahi hai… poor little soul.Recommend

  • Galuru Ben
    Nov 10, 2013 - 12:43PM

    What Np says.Recommend

  • polpot
    Nov 10, 2013 - 12:56PM

    “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.’
    ++++++++++++++++++++++++++++++++++++++++++
    Famous last words.

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  • rashid zaidi
    Nov 10, 2013 - 2:38PM

    Every country has it’s interest supreme at heart, then anything else. Since Pakistan has for whatever reasons never been able to establish it’s credibility in any form in the world, the past 30 years it is a big disadvantage.
    That is what they should work on the most. The US will never ever give a nuclear deal to Pakistan,it has opposed it since 1970s.
    India is a large country with tremendous promise, a fair democracy.It now has wealth, it’s made progress in agriculture, industrialization,most of all it has a created a massive middle class of 350 million people, it has world class education, a huge IT sector without which the term IT would be meaningless.What Pakistan needs is to put it’s house in order first. Even Iran is suspicious of Pakistan, they have huge trade with India. They do not buy Pakistani Basmati, because they can buy it from India on better terms.Humilityshould be the order of the day.For instance Mr. Dar should look a bit more modest take off his Lahoria attitude, it can work around Lahore only, not in the world where everything is negotiated. Pakistan and it’s people have to take care of the monster created by ISI, the Taliban, the government has to take charge of the military and its clandestine operations so there no overriding power beyond the legistrative branch of the government. No investor wants to invest in a place where there is no law and order. Mr. Nawaz Sharif should also get off his high horse and get intelligent Pakistanis to help him, after all he is an elected PM not the Nawab of Pakistan, his cronies are not the most competent bunch.He is not a good communicator a politician has to let his people know what’s up. It will be a rough ride, Mr. Nawaz should be able to complete his term and prove his government was fair not corrupt and did a good job while in office. Let’s get mature and feel 66 plus years old. Countries younger than Pakistan have surged ahead in every field we can do that also it’s time to act positively.

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  • antanu
    Nov 10, 2013 - 5:26PM

    @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

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  • unbelievable
    Nov 10, 2013 - 6:05PM

    Typical Pakistan — lots of emotional anti American chest thumping followed by slow realization that the only thing you have accomplished is a sore chest. Traveling to the USA for an exemption make sense – your not going to get it but it will help Pakistan when it claims force majeure to avoid penalties for not building.

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  • someone
    Nov 10, 2013 - 9:00PM

    Pakistan government was playing bluff with US. They wanted to show the US that if it does not do a civilian nuclear deal with it, they will go ahead with IP pipeline for their energy needs. But US outsmarted them by calling their bluff. Pakistan went ahead and signed the contract with Iran. Now Iran has completed the works on its side and demanding Pakistan to start work on rest of it through Pakistan territory. Pakistan has no funds at all.Starting 2014, there are going to be huge penalties. Pakistan is standing between a rock and a hard place. Even if they build it somehow, what are they going to do with the gas? Their industry would not be competitive using this gas at such high prices and all the investment would be down the drains. Pakistan can not afford to give any more subsidies on electricity otherwise they will run into debts again and IMF is already tightening the strings. If only Pakistan could have come out of its kashmir obsession and could sign contract with India for the security of pipeline and uninterrupted gas supply, just like Indus river treaty where despite wars, water flow was uninterrupted, it could have saved a lots of trouble for itself. Tragedy is its not just the army and government of Pakistan but the ordinary people of Pakistan too have fatal attraction for Kashmir and unless people of Pakistan get over this obsession, things won’t work out for them.

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  • np
    Nov 11, 2013 - 12:24AM

    @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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  • No force majeure
    Nov 11, 2013 - 12:27AM

    @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

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