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Iran may cancel pipeline project

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World Pipelines,

OilPrice, GEO News and the Daily Times have reported National Gas Company Head, Hamid Reza Araqi, as stating that Iran may cancel a gas pipeline project with Pakistan that is worth approximately US$7 billion. The reasoning provided is concerns over stunted construction work.

Hamid Reza highlighted Iran’s three options: to continue with the pipeline, restart negotiations to reassess the project or to call it off altogether. If the project is cancelled, this would deprive Pakistan of approximately 22 million m3/d of gas. However, Pakistan, who was supposed to commence gas imports in early 2015, still has not begun the construction work on its side of the pipeline.

As highlighted by OilPrice, “the project is crucial for Pakistan if they are to avert a growing energy crisis already causing severe electricity shortages in the country of about 170 million, while it also grapples with Islamist militancy.”

Hamid Reza has called on Pakistan to complete its side of the gas pipeline project. Meanwhile, Pakistani officials have reiterated the country’s commitment to completing the project but noted that UN sanctions by and US measures on Iran have slowed down the progress.

According to OilPrice: “If negotiations fail to come up with a way to feasibly realise the project, […] Hamid Reza Araqi said on Friday [27 January] that the project could be cancelled entirely.”

Conceived in the 1990s, the US$7 billion gas project, which is set to connect Iran's giant South Pars gas field to India via Pakistan, has faced repeated delays since the start.

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