Tehran Not to Penalize for IP Pipeline Delay

Tehran Not to Penalize for IP Pipeline DelayTehran Not to Penalize for IP Pipeline Delay

Islamabad has delayed the import of Iranian natural gas through the Iran-Pakistan (IP) Pipeline after failing time and again to lay the pipeline in its own territory, but Tehran has no plans to take legal action against its eastern neighbor, managing director of National Iranian Gas Export Company said.

"Seeking penalty against Pakistan in not on the table … We are waiting for Pakistan to complete the pipeline," Alireza Kameli was quoted as saying by Mehr News Agency on Monday.

Iran and Pakistan signed a $1.5 billion natural gas pipeline deal in 2013. The accord stipulates that Pakistan would be fined up to $3 million a day if it failed to complete its portion of the pipeline by January 2015.

Iranian officials said in April that around 80%, or nearly 1,100 kilometers from a total of 1,400 kilometers of the pipe-laying on the Iranian side of the border were completed. But cash-strapped Islamabad says it is struggling to raise money to lay the pipeline on its side.

The so-called Peace Pipeline would bring much-needed gas to Pakistan, which suffers from a crippling electricity deficit because of a shortage of fuel for its power plants.

"Tehran is also unwilling to revoke the pipeline's contract with Islamabad," Kameli said, as the move would allow Pakistan to completely back out of its commitments and discard the project.

Pakistani officials had previously said the country was forced to delay the project in view of international sanctions against the Islamic Republic.

Shortly after the July 14 agreement between Iran and six world powers on Tehran's nuclear program and the increasing prospect of an end to Iran's financial and trade restrictions, Pakistani Petroleum Minister Shahid Khaqan Abbasi said, "Once the sanctions go, there is no excuse … We are looking at penalties of up to $3 million a day."

  Pak-Doha LNG Deal

Pakistan announced last week it had finalized a hefty $16 billion deal to import LNG from Qatar, Iran's biggest oil and gas rival in the region. But Kameli ruled out concerns over the agreement, stressing on high costs of LNG import compared to gas supply via pipeline in the long run. The shipments, expected to stand at 1.5 million tons a year, will go underway next month. In October 2014, the Pakistani government announced plans to build an LNG terminal at the southwestern Gwadar Port with Chinese funding at an estimated cost of $2 billion.

Pakistan has also signed an agreement with Russia for laying a 1,100-kilometer gas pipeline, stretching from southern Karachi to Lahore in the country’s northeast. The $2 billion project, to be built by Russian state-owned industrial conglomerate Rostec, with a capacity of 12.4 billion cubic meters per year, will connect Pakistan's LNG terminals from the port city of Karachi to Lahore.