Pakistan is also among the winners of the deal to curb Iran’s nuclear program.
A gas pipeline between the neighboring countries first discussed in the 1990s will finally become a reality, Pakistan’s Petroleum Minister Shahid Khaqan Abbasi said.
“It’s good they have reached an agreement,” Abbasi was quoted by Bloomberg as saying on Tuesday. “The work was stopped because of sanctions.”
Pakistan will start building its side of the pipeline in September, with a Chinese company doing the work. In April, Pakistan held negotiations with China Petroleum Pipeline Bureau, a subsidiary of Chinese energy major China National Petroleum Corporation, to finance 85% of the project; Pakistan will pay the rest.
“The country will complete an 80-kilometer section within six months of sanctions' removal”, Abbasi said. “The entire 800 kilometers of the pipeline in Pakistan will be completed in about 30 months.”
Abbasi said Iran still needs to complete 200 kilometers of the pipeline. So far, about 80% of the pipe-laying on the Iranian side of the border (1,100km from a total 1,400km) have been completed, according to Iranian officials.
The pipeline will bring much-needed gas to Pakistan, which suffers from a crippling electricity deficit because of a shortage of fuel for its power plants. Iran is to supply four million cubic meters of gas per day with capacity to increase the volume up to 35 mcm/d.
The pipeline will transfer gas from Iran to the Pakistani cities of Gwadar and Nawabshah. Karachi, the country’s biggest city of 27.3 million, will also be connected via local energy distribution systems already in place.
The government in Islamabad is planning to complete the project in two phases. First, a liquefied natural gas terminal would be built at the Gwadar Port and then a 42-inch pipeline spread over 700 kilometers would be laid from Gwadar to Nawabshah for onward transmission of gas to northern parts of the country.
The LNG terminal will have a capacity to handle up to 500 million cubic feet per day of LNG, and later the capacity of the terminal will be expanded to 1 bcf/d.
The project could cost up to $2 billion if an LNG port is constructed at Gwadar. Otherwise, the project to complete the Pakistani pipeline will cost between $1.5 billion and $1.8 billion, according to reports.
“Having a neighbor like Iran with abundant gas reserves is a great advantage for Pakistan,” Abbasi said in January. “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,” he added.
Meanwhile, adviser on foreign affairs and national security to Pakistan's prime minister, Sartaj Aziz, also welcomed the nuclear deal, expressing hope that the landmark deal on the Iran nuclear program will remove all hurdles to build the long-awaited multibillion gas pipeline.
