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Iran and Pakistan finalise pipeline deal

World Pipelines,

Pakistan and Iran have signed an agreement finalising the plans to construct a natural gas pipeline between the two countries.

The 2700 km "peace pipeline" project was first proposed in the 1990s and was initially intended to carry gas from Iran to India. However. India withdrew from negotiations last year as a result of disagreements over price, transit fees and continued security concerns regarding Pakistan.

Iran and Pakistan signed the initial pact in June last year and reached agreement on pricing in September. The deal, which was signed between the two countries in Turkey, will ensure a flow of Iranian gas to Pakistan to begin in three to four years.

Iran will initially export 30 million m3/day of gas to Pakistan and will then increase this to 60 million m3/day.

Under the agreement, each country will be responsible for building the section of pipeline that runs through its own territory. The signing had been delayed because the Pakistani government had been unable to allocate sufficient financing and had been refused assistance from the US.

The US refuses to provide any kind of financial assistance for the pipeline, as it believes that the project undermines sanctions efforts against Iran, which it believes has ambitions to build nuclear weapons. Iran, however, denies these allegations. The US had previously pledged to ensure energy security for Pakistan, with US companies such as 4Gas, Walters Co. and Global Edison planning various energy-related projects in the country.

Pakistan argues that the US$7.6 billion project is crucial for the country's growing energy requirements. In the past, Pakistan has suffered severe electricity shortages and blackouts as a result of gas shortages. The country's total power generating capacity is currently about 4000 MW short of demand. The new pipeline agreement will ensure the delivery of 750 million ft3/day of gas in Pakistan from Iran for the next 25 years. The overland pipeline route will stretch from the South Pars fields in southern Iran to Pakistan's Baluchistan and Sindh provinces.

In addition, China has expressed an interest in investing in a pipeline from Iran via Pakistan into China. If China joins the project, the pipeline would pass through Pakistan's Northern Areas and into China via the Khunjerab Pass.

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