Tehran Committed to IP Gas Project

Tehran Committed to IP Gas Project
Tehran Committed to IP Gas Project

Iran is ready to export natural gas to Pakistan as previously agreed between the two countries, announced oil minister Bijan Namdar Zangeneh, as quoted by Mehr news agency.

The MNA report said that Pakistan is apparently not ready yet to import gas from Iran as no concrete plan has been put forward by Islamabad for pipeline construction and other parts of the project. In early 2013, Islamabad approved the $1.5-billion deal with Iran for laying the 785 km Pakistan segment of the pipeline.

A few weeks later, the then-president Mahmoud Ahmadinejad and his Pakistani counterpart Asif Ali Zardari officially inaugurated the final construction phase of the project. But almost two years later, the Pakistani government has not started laying its part of the pipeline, while it should pay a $3 million penalty per day as of January 1, 2015 for delays on construction of the pipeline within the agreed timeframe.

Islamabad says the delays are caused mainly because of the US-led sanctions against Tehran, a claim rejected by Iran's oil ministry officials. Speaking to MNA on Friday, Zangeneh said that Iran is ready to fulfill its part of the gas pipeline deal with Pakistan, denying reports that Iran has waived the fines Pakistan has to pay for delaying the project. "We can start export of natural gas to Pakistan in just 10 months if they show that they are determined to do so."   

Earlier, Pakistani Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi had said his country seriously pursues the issue of gas import from Iran.

"Pakistan has spent tens of millions of dollars for importing gas from Iran," he added, hinting that it would be unreasonable for Islamabad to abandon this project.

“There is no doubt that Pakistan is serious in the joint implementation of the gas pipeline project with Iran,” he added.

“Having a neighbor like Iran with abundant gas reserves is a great advantage for Pakistan,” Abbasi said.

“Pakistan will not only try to grasp this opportunity without hesitating, but we are also considering constructing three or more pipeline projects with the aim of importing gas from Iran,” the Pakistani minister asserted.

Referring to the recent plunge in global oil prices, Abbasi said that the situation is not at all in favor of Pakistan, as an oil and gas importer, “because the oil producing countries would rather slash imports of non-oil products.” This, he said, would have a negative impact on Pakistan’s economy as it exports non-oil commodities to countries that sell it oil and gas.

  Talks Still Underway

The oil ministry recently affirmed that negotiations were being held between the two neighbors to resolve the long-pending issues.

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.

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.

It is still unclear whether Iran extended the time limit for the construction of IP pipeline project. Amir Abbas Soltani, a member of the Energy Committee of the parliament 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 yet.”

A former oil ministry official said last week that two billion dollars have so far been spent on the project, adding that it needs another one billion dollars to be completed. As to Pakistan's part in the project, Ali Majedi said that, because of the delays by the other side, the project will take 4 years to become operational if Islamabad assigns a contractor for its half of the project.  

"We cannot provide any financial aid for Pakistan in this regard," Majedi asserted, noting that Iran cannot finance another country's pipeline construction budget given the sanctions imposed on the country in the past few years.

  Gas Output Rising

Elsewhere in his remarks, Zangeneh stated that Iran can supply enough gas to Pakistan in line with the final agreement "since our natural gas production will rise 200 million cubic meters after the prioritized phases of South Pars come into operation."

Phases 12, 15, 16, 17, and 18 have been given priority, the minister said, adding that once these phases become operational, Iran can meet its domestic demand for natural gas and export the surplus to the neighboring countries.