No New Agreement on IP Pipeline

No New Agreement on IP Pipeline No New Agreement on IP Pipeline

The oil ministry on Tuesday denied any agreement with Pakistan regarding the Iran-Pakistan (IP) pipeline project; however, it affirmed that negotiations were held between the two neighbors to resolve the long-pending issues.

"The ministry denies any agreement in this regard, while emphasizing on the importance of the gas deal between Iran and Pakistan and the two sides' determination to go ahead with the project within the stipulated time," it said in a disclaimer cited by Tasnim news agency.

Pakistan's English-language daily Express Tribune claimed Monday that Iran has revised its  agreement on the gas pipeline project, proposing that Pakistan engage a third party to pay for gas to be transported from Iran’s South Pars field due to financial sanctions imposed on Tehran over the nuclear program dispute.

Pakistan suggested that the international embargo on Iran had prevented that country from pushing ahead with the multi-billion-dollar  project on its territory. "Despite the best efforts, international contractors and equipment suppliers were not willing to be part of the scheme," Pakistani Petroleum and Natural Resources Minister Shahid Khaqan Abbasi said.

The government in Islamabad is now planning to complete the project in two phases – first, a liquefied natural gas (LNG) terminal would be built at the Gwadar Port and then a 42-inch pipeline spread over 700km would be laid from Gwadar to Nawabshah for onward transmission of gas to northern parts of the country, Abbasi said.

The government is engaged in negotiations with Chinese companies for construction of the pipeline and work on a 70km stretch of the pipeline from Gwadar to the Iranian border will be undertaken by Pakistani companies. “This project is expected to start in the near future,” he said.

The pipe laying project within Iran's border was carried out at a cost of $2.5 billion, however, the 780 km pipeline due in Pakistan has not been laid due to funding difficulties faced by the Pakistani government.

  Delay Penalty

It is still unclear whether Iran extended the time limit for the construction of IP pipeline project, and waived off the$3 million penalty per day, which is due on Pakistan from 1st January 2015 for delays on construction of the pipeline in time.

The Financial Times cited Abbasi as saying Dec. 26 that in line with “new understanding” between the countries there will be no penalty applicable from January 1. However, in an exclusive interview with IRNA on Saturday, Abbasi stressed that he had never made such a statement in a recent interview with the FT.

According to Abbasi, Pakistan desires to deepen trade and economic ties with Iran not only in the oil and gas sector including trade in liquefied petroleum gas (LPG) and petro-chemicals, but also in other key economic sectors like fertilizers.

Amir Abbas Soltani, a member of the Majlis Energy Committee also rejected the claim that Tehran has exempted Pakistan from fines for delay in the completion of the long-awaited joint project, saying that the committee will study the issue. “There has been no agreement in this regard.”

The US imposed an array of sanctions on Iran to curb the country's nuclear program, which it claims is geared to military use. Tehran insists its program peaceful. Iran and P5+1 ( five permanent members of the UN Security Council plus Germany) are negotiating a final solution to the protracted dispute.