Iran gas pipeline: ‘US refuses to exempt project from sanctions’

Pakistan moves ahead with TAPI project after being assured it will not have to arrange the needed funds.

ISLAMABAD:

The United States has refused to exempt the Iran-Pakistan (IP) gas pipeline from possible sanctions against Iran, creating even more uncertainty about the future of the project.

Pakistan had, earlier, given government guarantees pertaining to the IP pipeline to Iran, making it difficult for the present government to back out from the project.

Due to the threat of sanctions, however, Islamabad has been unable to secure the required funding for the IP pipeline. It even placed a $2 billion request before the Iranian government in order to finance the project.

According to sources, Pakistan most recently took up the issue with US authorities at a meeting on the sidelines of the revised bilateral strategic dialogue in Washington last week. However, the US did not give any assurance that it would exempt the IP pipeline from sanctions.



“We are evaluating the project at this stage and cannot give it exemption from possible US sanctions,” an official privy to developments quoted the officials as saying.

On the other hand, sources said the US pushed Pakistan to move ahead with the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project instead. They added that Pakistan was assured the pipeline-building and gas exploration contracts for the TAPI project would likely be awarded to US companies like Chevron, thus relieving it of the responsibility to secure finance for the initiative.

All countries participating in the TAPI project gathered in Ashgabat, Turkmenistan to sign a transaction advisory contract with the Asian Development Bank soon after the Pakistan-US dialogue concluded, according to the sources. The bank will help generate funds for the project, they said.

Pakistan had earlier requested the exemption of the IP project from sanctions during Prime Minister Nawaz Sharif’s visit to the US.

The matter was also raised during US Secretary of State John Kerry’s visit to Pakistan as well. Kerry was reportedly handed a paper urging Washington to consider exempting the project from any sanctions against Iran.

No positive response has been received from the US so far, however.

Instead, Washington has been asking Pakistan to look into other initiatives to meet its energy needs. Recently, the US offered Pakistan assistance in shale gas exploration and the import of liquefied natural gas in a bid to dissuade it from pursuing the gas deal with Iran.

Pakistani officials, on the other hand, consider the IP pipeline most viable for meeting the country’s growing energy demands.

At the same time though, the project remains in doldrums because of US and EU sanctions against Iran, due to which the latter has been unable to develop its South Pars gas fields.

Published in The Express Tribune, November 20^th, 2013.