Pakistan Mulls Alternative to IP Pipeline

Pakistan Mulls Alternative to IP PipelinePakistan Mulls Alternative to IP Pipeline

Amid the lingering threat of sanctions from the United States, Pakistan has decided to offer an alternative plan to Iran, involving conversion of natural gas into Liquefied Natural Gas (LNG), a move that could all but shelve the Iran-Pakistan (IP) gas pipeline project.

Sources told The Express Tribune that the plan will be discussed with the Iranian authorities in an upcoming meeting in Tehran.  Pakistan's Petroleum Minister Shahid Khaqan Abbasi confirmed that the proposal of gas import in the form of LNG was under study and would be discussed with Tehran.

Under the new plan, Iran will convert natural gas into LNG and then export it to Pakistan by using terminal facility of Oman.

Iran and Oman have already signed an agreement, according to which Oman will purchase around $60 billion worth of natural gas from Iran in the next 25 years, with the project stipulating the laying of a $1 billion gas pipeline across the Gulf to Oman. Around 50% of the gas, which Iran will export to Oman, will be delivered to Japan, South Korea, and India.

“We may also use Oman’s LNG terminal facility to import gas from Iran,” a source said, adding that Pakistan would not face shipping problems as Oman is close to Pakistan. Another plan is to set up an LNG terminal at Gwadar and laying pipeline from Gwadar to Nawabshah in Sindh, he added. “This plan will also be discussed with Iran,” the source said, adding that the Chinese companies were interested in setting up the LNG terminal and laying the pipeline from Gwadar onwards.

 Officials said Iran had also conveyed to Pakistan that it, too, had some proposals to implement IP gas pipeline amid threats of US and EU sanctions, which would be put on the table in the Tehran meeting.

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

According to the preliminary agreement between the two countries, if the gas export to Pakistan does not commence by December 31, Pakistan must pay Iran $200 million per month. Bijan Namdar Zanganeh, the oil minister, said previously that Pakistan had asked for a two and half year delay with the project, which has been rejected by Iran.