Iran likely to drop IP gas pipeline project

Iranian Oil Minister Bijan Namadar Zanganeh has announced that that the country is likely to give up on the US$ 7.5 billion pipeline project, which was due to take gas reserves to energy hungry Pakistan. Zanganeh told reporters, “The contract for supplying gas to Pakistan is likely to be annulled.”

Under the contract, Iran is supposed to export 21.5 million m³/d of gas to Pakistan form 2014. The 990 km Iranian section of the pipeline is complete, but 780 km on the Pakistani side is yet to be finished.

Earlier this week, Islamabad’s Petroleum Minister Shahid Khaqan Abbasi said that Pakistan have asked Iran for US$ 2 billion in financing to build its side of the controversial natural gas pipeline, which has drawn threats of US sanctions. Under such conditions, "it is seems improbable to export gas" to Pakistan Zanganeh added.

Pakistani Foreign Ministry Spokesman Aizaz Chaudhry reiterated Islamabad’s resolve to pursue the project. “It [IP] should be seen in the context of acute energy crisis that we have in our country,” said the Pakistani official, adding that his government is pursuing the case to accelerate the implementation process of the project.

However, a report released last week by the Islamabad-based Sustainable Development Policy Institute (SDPI) says the contract with Iran would bring an economic disaster in Pakistan as the gas sold will likely be several times more expensive than the domestic gas currently used.

Edited from various sources by Hannah Priestley-Eaton

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