ISLAMABAD – Pakistan has suspended gas pipeline project with Iran andinformed the neighbouring state in writing that execution of the projectwas not possible as long as Tehran is under United States (US) sanctionsregime, Geo News reports on Saturday.
According to Inter-State Gas Managing Director Mobin Saulat “Under presentUS sanctions on Iran, it is impossible to execute the Iran-Pakistan gaspipeline project and we have conveyed it to Iran in writing recently.”
Earlier in February, both the neighbouring countries started a new round ofnegotiations after Tehran formally issued a notice to Islamabad statingthat it was moving an arbitration court against Pakistan for failing to laydown the pipeline in Pakistani territory in the timeframe as stipulated inthe bilateral agreement.
Sault said that Pakistan was still committed to executing the project onlyif international sanctions on Iran were lifted. He said that Pakistancannot risk US sanctions by continuing with the project as Pakistan willrisk US sanctions while working with Iran on the project.
Regarding Iran’s legal notice, Saulat informed that Pakistan has time tillAugust 2019 to respond legally, adding to this he hoped that the issue willbe settled through negotiations.
On the other hand, authorities in Iran were of the view that US sanctionsdid not apply to the IP gas project, to which Pakistan had sent Tehran aquestionnaire to ascertain exactly how that was the case.
According to the Paksitan-Iran gas pipeline project, signed in 2009, theproject was to be completed by December 2014 and would deliver 21.5 millioncubic meters of gas per day to Pakistan. It was decided that the pipelinewas to be constructed using a segmented approach, with Iran having to laydown the pipeline on its side and Pakistan to build the pipeline on itsterritory.
Under a penalty clause of Gas Sales Purchase Agreement, Pakistan is boundto pay $1 million per day to Iran from January 1, 2015, for failing tobuild its part of the pipeline. If Iran takes the case to an arbitrationcourt, Pakistan is likely to have to pay billions of dollars as a penalty.