Iran Urges Decision on Delayed IP Gas Pipeline

EghtesadOnline: Tehran and Islamabad should come to a resolution on a protracted project for the export of Iran's natural gas to Pakistan through a pipeline, the deputy oil minister for international affairs said.

News ID: ۷۴۳۱۲۰

01 August 2017

"We have an agreement [on gas export] with Pakistan. A final decision must be made on the matter," Amirhossein Zamaninia was also quoted as saying by ILNA on Monday.

After years of negotiations that included India as a potential investor, Iran and Pakistan signed a bilateral agreement in 2009 to lay a pipeline to deliver 22 million cubic meters per day of gas from the South Pars Gas Field in the Persian Gulf to Pakistan's Balochistan and Sindh provinces.

The pipeline's construction was to commence in 2012 and be completed in two years. But Pakistan backtracked on the project after the US and European Union introduced tighter economic curbs against Tehran over its nuclear program, according to Financial Tribune.

However, Islamabad has failed to show sufficient determination to complete the pipeline on its territory even after last year's lifting of sanctions, blaming financial constraints.

To meet its energy demand, Islamabad signed a deal in 2015 to import liquefied natural gas from Qatar for 15 years. The deal with the world's largest LNG producer has further dampened the prospect of the so-called "Peace" pipeline project with Iran.

Pakistani officials said in October that 700 kilometers of the pipeline inside the country was expected to be completed in two years, largely via Chinese finance. But some officials and analysts say low LNG prices in the international market have diverted Pakistan's attention from the IP gas pipeline project to attractive options such as Qatar's LNG.

Zamaninia said Pakistan's recent political developments should not come in the way of the gas pipeline project.

Media reports on Sunday said Shahid Khaqan Abbasi, Pakistan's former petroleum minister, has been elected interim prime minister a day after Nawaz Sharif was disqualified as PM on corruption charges.

"That is their [Pakistan's] domestic issue and doesn’t conflict with their gas deal with Iran," Zamaninia said.

The IP Pipeline faces another deterrent in the Turkmenistan–Afghanistan–Pakistan–India Pipeline. The project, which is forecast to come on stream next year, will allow Turkmen gas to flow into Pakistan.

Gas Industry

The deputy oil minister's statements come as Iran is expanding its footprint in the regional gas market. Iran began supplying Iraq with natural gas through a pipeline in June, about four years after the two countries signed a preliminary export deal.

Holding the second-largest gas reserve in the world, Iran has boosted gas supplies to more than 880 million cubic meters a day and plans to raise output to 1 billion cubic meters daily by the end of the year. Turkey is currently the largest customer of Iranian gas under an agreement to import up to 30 mcm/d of gas.

The bulk of Iran's gas output is used at home for power generation and heating as well as for injection into crude oil wells to boost recovery.