Iran Pakistan Gas pipeline: Iran again asks Pakistan for revival of project

Iran Pakistan Gas pipeline: Iran again asks Pakistan for revival of project

ISLAMABAD: Iran has again requested Pakistan to revive the Iran-Pakistan (IP) gas pipeline project amidst fierce opposition by Saudi Arabia and the United States.

In a letter written to Pakistan, Iran has requested to hold talks on impending issues causing delays in the execution of the project, reported Express Tribune.

Previously; Pakistan had requested to decrease the price of gas supply from Iran, considering availability of cheaper alternatives like LNG import from Qatar.

Under the agreement, Pakistan has the right to seek a price reduction in provision of gas supply from Iran, if it can procure supplies at cheaper prices from other sources citing the 15-year LNG deal sealed with Qatar, said an official.

Pakistan has voiced fears that it won’t be able to obtain financing for the IP gas pipeline project as Iran is under sanctions for its nuclear programme, which it vehemently rejects.

On the other hand, Saudi Arabia has increased pressure on Pakistan from expanding its relationship with Iran. This resulted in the shelving of Gwadar LNG pipeline, which was aimed at serving as an alternate to the IP gas pipeline.

Under ex-PM Nawaz Sharif, the Cabinet Committee on Energy decided to abandon LNG pipeline project citing mounting delays and cost increases to $2.3b.

But according to officials, the cost was inclusive of $600m in revenues and duties that were expected to flow in because of this project. Considering the pipeline’s strategic significance, the government may reconsider to resuscitate the Gwadar LNG pipeline project.

PM Shahid Khaqan Abbasi has indicated the project will again be reviewed due to its strategic significance. If the forestalled project gets revived, an LNG terminal will be established at Gwadar to handle and process gas imports.

As per the agreement, Pakistan was supposed to have laid the pipeline by December 2014, but due to international sanctions on Iran prevented the country from going ahead with the project. If all sanctions are lifted, the Gwadar LNG pipeline will be connected to the IP one at the Iranian border.