The troubled multi-billion-dollar gas pipeline project between Pakistan and Iran is virtually dead. With the sword of possible international sanctions dangling over their head, Pakistan’s economic managers have decided to stall the $7.5 billion Iran-Pakistan (IP) gas pipeline project until the international community lifts sanctions against the Islamic Republic, The Express Tribune has learnt.
According to sources, the economic decision-makers believe the project couldn’t be implemented under the present geopolitical situation because of Tehran’s association with the project.
They decided the border phase of the project would only be implemented once international sanctions were lifted and Pakistan was in a position to construct and connect its portion of the pipeline with the Iranian pipeline with no concern for sanctions on its companies for receiving gas or making gas payments to Iran.
The decision-makers in a meeting of the Economic Coordination Committee (ECC) held on October 2 had noted that since phase-II would comprise construction of an approximately 80-kilometre long pipeline, it would require little time for completion, sources said.
The meeting was informed that a gas sales and purchase agreement (GSPA) between the Inter-State Gas Systems Pvt Limited (ISGS) from Pakistan and the National Iranian Oil Company (NIOC) was signed in June 2009.
Despite Pakistan’s best efforts, the project repeatedly hit snags due to the international sanctions imposed on the Islamic Republic for its controversial nuclear programme. Iran’s association with the project and possible risk of violating sanctions has scared away potential financiers, reputable international suppliers of crucial equipment and contractors.
The economic managers were also informed about Iran’s unilateral withdrawal from the government-to-government cooperation agreement and the $500 million financing for the construction of Pakistan’s portion of the pipeline. This had created a force majeure situation for Islamabad and accordingly the matter was taken up with Tehran as per the provisions of the GSPA.
It was also stated that the Gwadar-Nawabshah LNG terminal and pipeline project had been planned keeping in view any future developments in the IP project.
The pipeline would meet growing needs of the energy-starved Pakistan and could also be utilised to link up to the Iranian border in future.
“As work of pipeline route has already been done for the IP project, it has been envisaged that the same specifications should be utilised for this project,” an official of the Ministry of Petroleum and Natural Resources said, adding that this project would provide capacity of up to 500mmcfd of LNG-based gas supply which could be used to cater for the needs of public and private sectors.
It shall also serve as a means to realise the objectives of the IP project for the import of substantial qualities of urgently needed natural gas within three years. After detailed deliberations, the ECC approved in principle the Gwadar-Nawabshah LNG terminal and pipeline.
Officials of the Ministry of Petroleum and Natural Resources said that proposals for this purpose had been shared with Iranian authorities who would respond after discussing with their high-ups.
Published in The Express Tribune, November 18th, 2014.
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The so called economic managers of Pakistan should be dismissed. These political appointees and bureaucrats can only do one thing and that is flattery and how to arrange another foreign trip for them and their families. Otherwise they are incapable to solve anything. Somebody should tell these managers that Iran is exporting Gas to Turkey and Oil to India, China, Japan, South Korea and Taiwan. The case studies of these countries should be studied. Just like these countries have successfully defended their interest of securing gas and oil supplies in a similar manner we should take the stance as well. Moreover the hypocricy of America should be exposed at every forum. Washington is more than happy with Iranian exports to India but why they have a problem with Pakistan?. The double standard of Americans should be exposed in every manner as well.
@AVMPolpot Whats the matter mate? Why do you feel the need to troll so much? How do you even have so much free time? Cant find a job in India, perhaps?
You signed a deal not knowing the following
1) Construction Cost (ET article had billion dollar swings) 2) Where you would get financing 3) Actual route of the pipeline 4) Who would build the pipeline 5) How you would defend the pipeline 6) Whether it was good deal (no economic analysis ever performed) 7) Consequences of sanctions (America told you it would result in sanctions). 8) How you would pay for the pipeline 9) How you would pay for the gas (can't afford to buy fuel for current power plants). . Yet the IP remains popular, promoted by the govt and the Editors of Dawn and Express Tribune. Good example of decisions based on emotion rather than logic. Pretty clear to me that this was a dead deal from the start - desperate attempt by govt of Iran/Pakistan to appear like they were doing something positive.
So, not only has the Western world created dreadful terrorism within Pakistan, it is also economical destroying Pakistan via the the threat of sanctions. I think Pakistan has to embrace the BRIC grouping, or at least show a little independance.
Still our foreign policy towards any neighbour is not independent,secondly our leadership is too weak they themselves talk of sanction whereas India has never scammed to any dictate of USA and doing all type trade with Iran.Worst is it is shia gas may be not Halal.
Hillary and Kerry would be laughing now. Another nail in the coffin of economic independence.
@Babloo: Creative Applications for the IP Pipeline +++++++++++++++++++++++++++++++ Sir how about developing Metro Bus projects with suitable buses running in those pipelines.? PS The idea is sure to win elections and has been registered by me.
@Humza: Havent you heard the statement by Sartaj aziz that we don't care a hoot if there are Taliban all over country, they are our assets. I think we are already standing up to USA. Let us go ahead and complete this pipeline. What can anyone do? Ignore us, deny us business, restrict our movements, spy on our people all over world, etc. Well all that is already happening and we have our back to wall. Lets all stand for pakistan-iran pipeline.
The "Sword of Sanctions" was hanging even before Pakistan signed on the agreement, In fact US is in better terms with Iran now than at that time.So why this whole charade about sanctions??
@Chachoo: I don't know where you get your information from. Everyone is slowly towing the US line so as not to aggravate the US foreign policy on Iranian sanctions. @Blithe: A wise decision. Pakistan can ill afford to incur the wrath of US and international sanctions due to interaction with Iran on this pipeline. It's wise to have the pipeline at an almost ready stage to be made operational only when the world community lifts the pariah state status of Iran. If Japan is afraid of international sanctions for dealing with Iran who in their right mind thinks that Pakistan can flaunt international sanctions?
@Chachoo:
100% Agreed with your analysis bro. but i don't know for how long we will be waiting for those strong and visionary leaders who can only think for Pakistan.
Its interesting to note that some countries keep buying oil from Isis illegally while imposing sanctions on iran
India was intelligent enough to withdraw without spending a single rupee on this project, but was brave enough to defy americans and import oil directly from Iran. Iran would have known by now who their real friend is and who cannot be trusted.
" Multi-billion-dollar IP project virtually runs aground" ++++++++++++++++++++++++++++++++++++++ Ditto for the Daimer Bhasha Project. Wait and Watch!. Btw I object to the use of the word 'virtually' ...it was always a virtua,l photo op project.
Why not use the pipes for sewage and water drainage in Lahore or Multan ? You should have known that your pipe-dreams would never come true. Your militants are waiting to blow them up.
This was plain as the nose on your face ten years ago. And even more obvious when India pulled out five years ago.
Just think of all the wasted hours spent on this scheme, when it was clear it would never come to fruition.
The so called economic managers of Pakistan should be dismissed. These political appointees and bureaucrats can only do one thing and that is flattery and how to arrange another foreign trip for them and their families. Otherwise they are incapable to solve anything. Somebody should tell these managers that Iran is exporting Gas to Turkey and Oil to India, China, Japan, South Korea and Taiwan. The case studies of these countries should be studied. Just like these countries have successfully defended their interest of securing gas and oil supplies in a similar manner we should take the stance as well. Moreover the hypocricy of America should be exposed at every forum. Washington is more than happy with Iranian exports to India but why they have a problem with Pakistan?. The double standard of Americans should be exposed in every manner as well.
Show these news to our inept Politicians and Bureaucrats. http://economictimes.indiatimes.com/industry/energy/oil-gas/indias-october-iran-oil-imports-rise-60-y-o-y/articleshow/45175206.cms
http://www.arabianoilandgas.com/article-12624-iranian-oil-exports-to-india-jump-by-135/
Wouldnt that be an interesting Legal wrangle to Watch? ++++++++++++++++++++++++++++++++++ Pakistan and Iran in court over the 3 MnUsd per day penalty that Pakistan must pay to Iran as per contractual commitments.
We need to act rationally. We need to solicit the help of the US to avoid sanctions here. We must classify this as a critical trade and get dispensation.
This was dead, during the tenure of previous Govt, why all th e charade and meetings? The fact is that Pakistan simply did not have funds to furnish this project or provide guarantees as to the price of commodity ! In meantime plenty of meetings and travel took place at poor taxpayer's expense !