Chinese firm pulls out of Iran-Pakistan natural gas pipeline

Panyu Chu Kong Steel Limited (PCK) has pulled out of the Iran-Pakistan (IP) gas pipeline. The Chinese firm was selected as a qualified bidder to finance the pipeline, during a bidding process organised by the Interstate Gas Systems.

PCK had offered US$ 500 million for the IP pipeline, but retracted its decision after the Pakistani government expressed its unwillingness to extend the bid validity period.

The Iran-Pakistan pipeline fund

The project is estimated to cost US$ 1.5 billion dollars. Iran has already committed US$ 500 million in loans for laying the pipeline in Pakistan. In return, Islamabad promised the engineering, construction and procurement contract to Iranian firm Tadbir Energy.

As a result of PCK’s decision to withdraw funding, the Pakistan government is dependent upon Iran to fully fund the Pakistan portion of the pipeline. The recent transition of power in Pakistan and Iran has delayed engagements between the two sides, who have yet to come to an agreement on the financing of the project. A senior government official said that Iran and Pakistan will commence negotiations on the provision of funds for the pipeline, if Iran agrees.

Tehran has already expressed its willingness to increase the credit limit. “The two sides are expected to meet this month to take up the proposal that Iran gives the entire financing,” the official said.

In a press conference held recently, Petroleum Minister Shahid Khaqan Abbasi said Pakistan would re-negotiate the gas price with Iran, but the latter had not been formally asked about the matter.

IP pipeline specification

The IP gas pipeline will export 21.5 million m3/d of Iranian natural gas to Pakistan. Iran has already built 900 km of the pipeline, and is planning to help build the 700 km part of the pipeline in Pakistan.

The IP pipeline is designed to help Pakistan to overcome its growing energy needs.

Edited from various sources by Hannah Priestley-Eaton

Read the article online at: https://www.worldpipelines.com/business-news/17092013/chinese_firm_pulls_out_of_iran-pakistan_natural_gas_pipeline/