ISLAMABAD: The landmark deal between Iran and Western nations has apparently brought the multibillion-dollar Iran-Pakistan (IP) gas pipeline project back to life. Now, Islamabad hopes to invite China and Russia to finance the project that had been in the doldrums.

This deal will also help Pakistan to import oil from Iran, which was suspended in 2010 after the US and European Union imposed sanctions on Tehran. As a result, international banks had also refused to open Letter of Credits to import oil and therefore supplies were suspended.

Officials say the Geneva deal would help Pakistani and Iranian energy ministers, who are scheduled to meet for the first time in Turkey, to resume talks in a positive way.

“We hope the agreement between Iran and the world powers would revive confidence of countries like China and Russia to finance the IP gas pipeline project,” a senior government official said, adding that the Pakistani government has been requesting the US to exempt the project from possible sanctions. During his recent visit to the United States, Prime Minister Nawaz Sharif had also asked the Obama administration to exempt the project from sanctions, but he was noncommittal.

Islamabad has been facing a delay in the important energy project as the government failed in securing funds for the project. The incumbent PML-N government was also forced to request the Iranian government to completely finance the project.

The first gas flow was scheduled for December 2014. However, the possibility of US sanctions caused such trepidation that even the Oil and Gas Development Company Limited (OGDCL) and National Bank of Pakistan (NBP) had refused to provide funding for the project.

A petroleum ministry official said Islamabad had earlier approached Moscow and Beijing for a solvent solution – but even Russian banks backed out. “Now, we are hopeful that those institutions would have some confidence and they would sponsor the IP project after Iran and Western nations inked the agreement,” another official said.

Likewise, Pakistan would now be able to import pipeline material and compressors required for its development. Officials claim that the country can now buy material at competitive rates as the Geneva deal has opened way to award the contract to any party.

As there was no progress on the IP pipeline, Tehran was also unable to develop its South Pars field, the source of the gas supply for the project. “But now, Iran will be able to develop the field by importing technology,” said an official. “Moreover, the Geneva agreement would help improve trade ties with Iran.”

Despite a lot of optimism, some officials are still sceptical. When contacted, one of the senior aides to the prime minister was cautious about drawing any conclusion at this stage. “It is too early to say anything. The impact of the relief in sanctions will be very limited.”

He said Pakistan would continue to observe the situation closely and hoped that the accord on Iran’s nuclear programme would eventually lift all economic sanctions.

Published in The Express Tribune, November 25th, 2013.