Manufacturers and energy industry officials have been requesting the government to expedite work on gas import projects for years as local reserves like Sui Gas Field deplete fast. PHOTO: FILE
Pakistan and Iran will work to amend an agreement covering a transnational gas pipeline, which won’t be completed by end of 2014 as envisaged under the contractual obligation, Petroleum and Natural Resources Minister Shahid Khaqan Abbasi said.
“Let’s be realistic. The Iran-Pakistan (IP) pipeline cannot be completed this year,” he told The Express Tribune, upon his return from Iran where Prime Minister Nawaz Sharif had taken a high level official delegation for talks on diplomatic and economic issues.
“This is what we have told our Iranian counterparts as well. We were under contractual obligation to finish the work by December (2014) but because of some issues we couldn’t start the work,” he said.
Under the agreement, Islamabad has given a sovereign guarantee to Tehran, committing itself to start purchasing gas by end of this year.
Missing the deadline means Pakistan would have to pay $3 million a day in penalty. “Both sides have decided to sit together and work on new clauses, which will be added to the agreement in the coming months.”
Initially known as the Iran-Pakistan-India pipeline, this idea was conceived in early 1990s. Since 1995, successive governments have failed to execute it. India has also pulled out of the project.
The 1930 kilometre-long pipeline will cost around $7.2 billion and deliver 750 million cubic feet per day (MMCFD) of gas. Iran has built most of the pipeline section, which crosses its territory.
Pakistan has yet to start work on its 781-km long section, partly because it faced problem in securing funding from international financial institutions because of US sanctions, which stop companies and governments from working with Iran.
The project was almost shelved late last year yet government now believes it would be implemented.
“What we said about our commitment with the pipeline project is no political statement,” Abbasi said. “Prime Minister Nawaz Sharif met various officials in Iranian hierarchy. And this issue surfaced everywhere.”
The pipeline’s importance with regards to Pakistan’s growth cannot be overstated, he said. “We need this at any cost even after we have the LNG import terminal.”
“Our gas shortfall is around 2.2 billion cubic feet a day, which goes up to 4bcf if latent demand is taken into consideration.”
Gas meets 50% of Pakistan’s energy demand. All of it is met through domestic resources.
Manufacturers and energy industry officials have been requesting the government to expedite work on gas import projects for years as local reserves like Sui Gas Field deplete fast.
Published in The Express Tribune, May 14th, 2014.
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It is good that the government is taking more mature and realistic approach. We dont need enemies in our neighborhood and neither we want to get isolated because of certain actions. So we need to develop a policy of cooperation with everyone. I hope we get gas without getting any trouble. i will say quiet and steady wins the race. Less loud statements and more hard work is the need of the day
What bout the new and abundant gas reserves found in Sindh (i think sajaval district?) ? how much time will it take to get that in to the system?
This nawaz government seems to not have the interest of the public at hand that is in need of Iranian energy .
Nawaz should just step down.