Pakistan, Iran sign $7.5 bn gas pipeline project -Pakistan Press Foundation (PPF)

Paksitan Press Foundtion

Pakistan, Iran sign $7.5 bn gas pipeline project

ISLAMABAD: Pakistan and Iran on Sunday finalised the $7.5 billion gas project dubbed as a “peace pipeline” to start the supply of natural gas to Islamabad from 2014.

The landmark agreement was signed by the managing director of the National Iranian Gas Export Company Reza Kasaeizadeh, and his Pakistani counterpart from Inter State Gas Limited, Mohammad Naeem Sharafat.

The Pakistani delegation, included Secretary Ministry of Petroleum and Natural Resources Kamran Lashari. “After decades of negotiations, we are witnessing today the execution of the agreement… to export more than 21 million cubic metres (742 million cubic feet) of natural gas daily from 2014 to Pakistan,” Ouji said.

He said that from Monday (today), Iran will start building the next 300-kilometre leg of the pipeline from the southeastern city of Iranshahr to the Pakistani border, through the Iranian port of Chabahar.

Iran has already constructed 907 kilometres of the pipeline between Asalooyeh, in southern Iran, and Iranshahr, which will carry natural gas from Iran’s giant South Pars field. “Now the project has entered into its implementation phase and there are no further formalities left in way,” Sharafat said. According to him, the IP project was another testimony of the long historic and cordial relations between Pakistan and Iran.

The pipeline will connect Iran’s giant South Fars gas field with Pakistan’s Balochistan and Sindh provinces. Pakistan has to construct about a 700-kilometre leg of the pipeline from the border, traversing along the Makran Coastal Highway to connect with its existing gas transmission network at Nawabshah. A 42-inch diameter pipeline is planned to be built, which is estimated to cost $1.65 billion.

The project is crucial for Pakistan to avert a growing energy crisis, already causing severe electricity shortages in the country and the project would help generate around 5,000 megawatts of electricity.

Under the gas sale and purchase agreement (GSPA), Pakistan will import about 750 million cubic feet a day (mmcfd) with provision to increase it to one billion cubic feet a day (bcfd).The volume of imported gas will be about 20 per cent of Pakistan’s current gas production and the agreement is for a period of 25 years, renewable for another five years.

Iran has the world’s second largest gas reserves after Russia but has struggled for years to develop its oil and gas resources. Sanctions by the West, political turmoil and construction delays have slowed down Iran’s development as an exporter.

Iran state television said the pipeline was 1,000 kilometres long, with about 907 kilometres of it already built. The Pakistan-India (IPI) gas pipeline project was conceived in early ë90s. However, the project could not take off for various reasons, including the new gas discoveries in Pakistan of Miano, Sawan and Zamzama, Indian concerns on pipeline security and Iranian indecisiveness on certain issues.

Pakistan would be allowed under an agreement signed in March to charge a transit fee if the proposed pipeline is eventually extended to India. The project was revived and bilateral Iran-Pakistan Joint Working Group (JWG) was constituted and the first meeting was held on December 29-30, 2003 in Islamabad.

Iranian officials say the country needs $25 billion to develop its crucial energy industry. The United States has tried to discourage India and Pakistan from any deal with Iran because of Tehran’s disputed nuclear programme, which the West fears is a cover to build bombs. Iran, hit by a fourth round of UN sanctions on Wednesday over its refusal to suspend its uranium enrichment activities, denies any such ambitions.
Source: The News