Iran-Pakistan project: Govt may turn pipeline deal into bilateral treaty
International law expert says move will help Tehran and Islamabad avoid looming US sanctions.
International law expert says move will help Tehran and Islamabad avoid looming US sanctions. PHOTO: AFP/FILE
ISLAMABAD:
Pakistan and Iran may convert their agreement on the gas pipeline project into a ‘bilateral treaty’ to avoid being hit by US sanctions.
Such an option will be discussed at the upcoming meeting of experts from Tehran and Islamabad, sources privy to the development told The Express Tribune.
They said that international law expert Ahmer Bilal Soofi had proposed turning the IP gas pipeline agreement into a ‘bilateral treaty’ as sovereign acts – as opposed to commercial transactions – were beyond the preview of the punitive US curbs.
Islamabad has previously made an unsuccessful attempt to seek a waiver from Washington but the Obama administration had refused to give any assurance in this regard.
Now that the first option of a US waiver has been ruled out, sources said, the two sides might discuss the possibility of converting the gas pipeline project into a bilateral treaty.
During a recent visit to Tehran, Pakistani officials had asked their Iranian counterparts to resolve the issue of possible US sanctions that has led to the delay in the implementation of the project and created hurdles in generating funds.
Already, Pakistan had expressed reservations over possible sanctions on the project due to tensions between Iran and the US.
“We cannot move on with the project unless the issue of possible US sanctions against IP gas pipeline project is resolved,” said an official, citing a message conveyed by Pakistani authorities to the Iranian authorities. For its part, however, Tehran blamed the delay on Pakistan.
The Pakistani side feels that with the US government having already listed the National Iranian Oil Company (NIOC) as a proscribed entity, its involvement with the project may not only invite US wrath in the shape of sanctions, but can also trigger similar EU curbs.
“Pakistani company Interstate Gas Systems (ISGS) working on IP gas pipeline project may also face US sanctions if it continues to work on the project,” an official said.
An energy expert said Pakistan should have avoided the inclusion of penalty clause, which says Pakistan will have to pay $3 million per day in case it fails to implement the project by December 2014. He said Pakistan should have built the IP gas pipeline project to the border as Iran had done but no progress was made.
“Now Pakistan may also face arbitration by Iran if it does not implement the project,” he said adding that Islamabad had given sovereign guarantee and was therefore bound to implement the project. He said Pakistan should again move a case before the US administration saying that the IP gas deal with Iran was signed before the sanctions and therefore qualified for a waiver.
Sources close to the development said that foreign office was involved in foreign policy with the US and it hoped to get a waiver from possible sanctions but it had failed to get it so far. The foreign office had been pushing during the past regime to move ahead on the IP gas pipeline deal.
According to a report prepared by petroleum ministry, if the furnace oil based power generation is replaced with imported gas, it will result in an annual savings of US$ 2.4 billion. It also said the incremental impact of the price of IP gas will be just 20% in the overall country’s average gas basket price if 750 million cubic feet per day (mmcfd) gas is imported.
Published in The Express Tribune, December 22nd, 2013.
Pakistan and Iran may convert their agreement on the gas pipeline project into a ‘bilateral treaty’ to avoid being hit by US sanctions.
Such an option will be discussed at the upcoming meeting of experts from Tehran and Islamabad, sources privy to the development told The Express Tribune.
They said that international law expert Ahmer Bilal Soofi had proposed turning the IP gas pipeline agreement into a ‘bilateral treaty’ as sovereign acts – as opposed to commercial transactions – were beyond the preview of the punitive US curbs.
Islamabad has previously made an unsuccessful attempt to seek a waiver from Washington but the Obama administration had refused to give any assurance in this regard.
Now that the first option of a US waiver has been ruled out, sources said, the two sides might discuss the possibility of converting the gas pipeline project into a bilateral treaty.
During a recent visit to Tehran, Pakistani officials had asked their Iranian counterparts to resolve the issue of possible US sanctions that has led to the delay in the implementation of the project and created hurdles in generating funds.
Already, Pakistan had expressed reservations over possible sanctions on the project due to tensions between Iran and the US.
“We cannot move on with the project unless the issue of possible US sanctions against IP gas pipeline project is resolved,” said an official, citing a message conveyed by Pakistani authorities to the Iranian authorities. For its part, however, Tehran blamed the delay on Pakistan.
The Pakistani side feels that with the US government having already listed the National Iranian Oil Company (NIOC) as a proscribed entity, its involvement with the project may not only invite US wrath in the shape of sanctions, but can also trigger similar EU curbs.
“Pakistani company Interstate Gas Systems (ISGS) working on IP gas pipeline project may also face US sanctions if it continues to work on the project,” an official said.
An energy expert said Pakistan should have avoided the inclusion of penalty clause, which says Pakistan will have to pay $3 million per day in case it fails to implement the project by December 2014. He said Pakistan should have built the IP gas pipeline project to the border as Iran had done but no progress was made.
“Now Pakistan may also face arbitration by Iran if it does not implement the project,” he said adding that Islamabad had given sovereign guarantee and was therefore bound to implement the project. He said Pakistan should again move a case before the US administration saying that the IP gas deal with Iran was signed before the sanctions and therefore qualified for a waiver.
Sources close to the development said that foreign office was involved in foreign policy with the US and it hoped to get a waiver from possible sanctions but it had failed to get it so far. The foreign office had been pushing during the past regime to move ahead on the IP gas pipeline deal.
According to a report prepared by petroleum ministry, if the furnace oil based power generation is replaced with imported gas, it will result in an annual savings of US$ 2.4 billion. It also said the incremental impact of the price of IP gas will be just 20% in the overall country’s average gas basket price if 750 million cubic feet per day (mmcfd) gas is imported.
Published in The Express Tribune, December 22nd, 2013.