Iran-Pakistan Gas Pipeline

11. October, 2013 News 13 comments

Peace Pipeline Project

Nowadays, growing energy crisis is causing severe electricity shortages in Pakistan. To bridge this gap the “Peace Pipeline,” also known as Iran-Pakistan Gas Pipeline project has been planned since the 1990s and originally would have extended from Pakistan to its old competitor, India. Iran has the world’s second-largest gas reserves after Russia, roughly 15% of the world’s gas supply. According to this project, the pipeline will connect Iran’s South Fars gas field with Pakistan’s Southern Baluchistan and Sindh provinces.

Involvement of International Politics

US ask Pakistan & India to pull out of Iran Gas Pipeline Project to qualify for extensive assistance. The United States has tried to discourage India and Pakistan from any deal with Iran because of Tehran’s supposed ambitions to build nuclear weapons. Iran denies any such ambitions.

Saudi Arabia, in an effort to persuade Pakistan to abandon the Iran gas pipeline and electricity/oil import deals, was reported to have offered an “Alternative Package” to meet its growing energy needs. In addition, the Arab kingdom was also said to have offered a loan and oil facility to bail Pakistan out of its financial and energy crises.

Sanctions by the West, political chaos and construction delays have slowed its development as an exporter.

India under US Pressure

The project was first mooted in 1994. It was proposed to carry gas through Pakistan to India in a 1,724-mile pipeline. But India, under intense pressure from the United States, backed off in 2009, citing disputes over prices, transportation fees and long-running distrust of Pakistan.

Interest of China

China, ever hungry for energy to fuel its rapidly increasing economy, has indicated that it might sign on and run an extension of the pipeline from Pakistan. China is the main obstacle preventing the United States mustering the U.N. Security Council behind new sanctions on Iran. Sanctions would cut 10-12 % of China’s oil imports and endanger oil contracts worth hundreds of billions of dollars.

China Backed Off

Pakistani and Chinese officials discussed the laying of the gas pipeline from Gwadar to Western China in a meeting, but Chinese firm which offered financing of $500 million for Iran-Pakistan (IP) gas pipeline has pulled out of the project after Pakistan government expressed its unwillingness to extend the bid validity period.

Long Term Benefits

If this project was approved, as part of the economic corridor, Gwadar Port connected through road and rail links to China could help enhancing trade between the two countries. Oil and gas pipelines could feature in the economic corridor, providing much-needed boost to economic activities in insurgency-hit Balochistan.

Progression of Project

According to a senior government official, Pakistan and Iran will start negotiations on provision of funds for the pipeline if the Iranian government gives the nod. Iran has already committed $500 million in loan for laying the pipeline in Pakistan.

Iran has almost completed the pipeline work in its territory, but Pakistan has yet to start construction of 780 kilometers of the pipeline on its side, which is estimated to cost $1.5 billion. Under the deal, 750 million cubic feet of gas will be pumped to Pakistan daily from Iran by mid-2015.






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Mehwish Khanam

I am Final Year Student of Petroleum & Gas Engineering at University of Engineering & Technology Lahore and Ambassador of YoungPetro in Pakistan.

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