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IP gas pipeline: A fading opportunity for Pakistan

Sunday, March 4, 2018

 

Near 20 years after the initiation of talks over the peace gas pipeline, beginning as the Iran-Pakistan-India gas pipeline project, and despite the fact that Iran has completed its part of the pipeline in its territory, Pakistan has fallen behind the target to take delivery of gas, initially scheduled for 2014.

Iran has repeatedly warned Pakistan about not being determined about completion of the project, and the disputes between the two countries seem to become more intense in recent years to an extent that Iran is considering taking legal actions in this regard or even the total cancelation of the high-profile, $7-billion project over lengthy construction delays from the Pakistani side.

Whatever decision Iran makes, if it is not going through with the deal, would deprive energy-starved Pakistan of about 22 million cubic meters of gas a day it would have received from its neighbor.

Iran and Pakistan started negotiating the IP gas pipeline in 1995 and soon after a preliminary agreement was signed between the two countries. This agreement foresaw construction of a pipeline from Iran’s South Pars gas field, in the southwest of the country, to Karachi in Pakistan.

Later India proposed joining the project to extend the pipeline from Pakistan into India. In February 1999, Iran and India also inked an agreement in this regard.

However India withdrew from the project in 2009, over pricing and security issues.

Three years later in September 2012, the IP gas pipeline project was announced to commence before October 2012 and be completed by December 2014.

The IP pipeline, would cover a distance of 1,900 kilometers, initially it would bring 750 million cubic feet of gas per day, which could later be enhanced to one billion cubic feet per day.

Pakistan was slated to begin Iranian gas imports in early 2015, but the country has not yet begun construction of the related pipeline.

With Pakistan not being able to complete its part of the deal, in November 2016 China Petroleum Pipeline Bureau (CPPB) expressed readiness to work on the remaining portion of the gas pipeline from Gwadar to the Iranian border to implement the Iran-Pakistan gas pipeline project; however, seemingly the two countries didn’t reach an agreement.

Shortly after, in December 2016 Pakistan requested Iran for amendment in the Gas Sale Purchase Agreement (GSPA) for implementation of the pipeline project in the extended period.

Iran agreed to negotiate that along with some other amendments and Pakistani side promised funds would be allocated for the Project as per procedure in the due course of time.

However, after 15 months still there is no signs of any determination for completing the project from the Pakistani side.

Indignant at ongoing delays from the Pakistani side, Iran announced recently that it is going to sue Pakistan at the International Court of Justice in which it could appeal for over $1 billion for compensation from the country.

Diplomatic sources say Pakistan is trying to dissuade Iran from taking legal actions against their country, however it is evident that they are still shadowed by the U.S threats of sanctions.

Pakistani officials should not forget the fact that, as Pakistan Senate Chairman Syed Nayyer Hussain Bukhari put it “The project is crucial for Pakistan considering the growing energy crisis which is already causing severe electricity shortages in the country.”

As many Pakistani experts and scholars suggest, they would better start negotiating with Iran without any further delays to supply their energy needs in the best possible way and also to prevent paying $1.2 billion for compensation to Iran.

 

*Source: Tehran-Times 

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