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Iran-Pakistan gas pipeline project: practical work to start soon

The government is actively pursuing to start practical work on the much-awaited Iran-Pakistan (IP) gas pipeline project. The practical work on decades old multi-billion dollars Turkmenistan-Afghanistan–Pakistan-India (TAPI) gas pipeline project has already entered its practical phase in Pakistan, and the government is making efforts to start work on the IP project soon.

The sources informed that the work on IP project could not be initiated due to international sanctions on Iran, however, Pakistan was ready to complete the gas pipeline within 30 months in its part once the sanctions on Iran were lifted.

Pakistan was keen in early implementation on the project and it had requested Iran for amendment in the Gas Sales Purchase Agreement (GSPA) to complete the gas pipeline in an extended period.

The 56-inch diameter pipeline will initiate from South Pars gas field Iran and end at Nawabshah covering a distance of around 1,931 kilometer with 1,150 kilometer portion in Iran and 781 kilometer in Pakistan.

The implementation is to be done on the basis of a segmented approach whereby each country will be responsible for construction of pipeline in the respective territory.

Under the project, a 56-inch diameter 1,680 kilometers pipeline, having capacity to flow 3.2 billion cubic feet per day (bcfd) gas from Turkmenistan through Afghanistan and Pakistan up to Pak-India border would be completed by the year 2020.

From the TAPI pipeline, Pakistan and India would get 1.325 (billion cubic feet per day) bcfd gas each, while Afghanistan’s share would be 0.5 bcfd gas.

There were reports Iran may cancel high-profile gas pipeline project with Pakistan due to stunted progress on construction work.

Iran is faced with three options: either to continue with the pipeline, restart negotiations to realize the project or cancel it altogether.

Pakistan was to start gas imports in early 2015, but has not begun construction of a pipeline. Iran also has failed to finish the IGAT7 project which was to transit South Pars field’s gas to the borders with Pakistan.

Pakistani politicians have reiterated the country’s commitment to complete the project, while noting that sanctions by UN and the US on Iran slowed down the progress.

The $7 billion gas project has faced repeated delays since it was conceived in the 1990s to connect Iran’s giant South Pars gas field to India via Pakistan.

The government had allocated Rs25 billion in the current fiscal year for the development of gas infrastructure across the country including the IP project.

Pakistan was keen in early implementation on the project and it had requested Iran for amendment in the Gas Sales Purchase Agreement (GSPA) to complete the gas pipeline in an extended period. Around 750 mmcfd gas flow in the pipeline is projected to help generate around 4,000 MW electricity also, along with creating job opportunities in backward areas of Balochistan and Sindh.

Pakistan is in contact with Iran to renegotiate gas rates signed under the multi-billion dollar gas pipeline deal as the new price would improve chances to complete the long delayed project in the extended period.

The government has requested Iranian authorities to bring changes in the gas sale and purchase agreement (GSPA).

The price of natural gas, under GSPA, was agreed at $12 per million metric British thermal unit (MMBtu), if crude oil price stood at $100/bbl in the international market.

The Iranian authorities had already agreed to negotiate amendment in the GSPA with some other amendments, which are awaited.

The government is eager to implement the Iran-Pakistan (IP) gas pipeline project and a draft amendment had been shared with Iran.

A revised timeline for completion of the project would be decided mutually in the forthcoming meetings between Pakistan and Iran and the details would be sorted out by the Experts Group, which would meet to discuss and decide on all outstanding matters.

The government failed to secure fund to build its section of the pipeline due to a lack of interest from financial institutions, international oil and gas companies on the US opposition of the Iran-Pakistan pipeline project, following sanctions imposed on Tehran.

The government has planned to build a pipeline in the coastal city of Gwadar, which is the main part of Iran-Pakistan gas pipeline project and will later be extended to Nawabshah in Sindh.

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