Pakistan, Iran sign gas pipeline deal
By Syed Fazl-e-Haider
QUETTA, Pakistan - Officials from Pakistan on Sunday finally signed a gas
pipeline accord with Iran, without India's participation, after 14 years of
on-off negotiations over what was initially framed as the Iran-Pakistan-India
(IPI) gas pipeline project.
Under the gas sale purchase agreement signed between the Iranian National Oil
Company and Interstate Gas System of Pakistan, Iran will provide 750 million
cubic feet of gas per day to Pakistan for the next 25 years. Officials in
Islamabad termed the deal a major breakthrough and an achievement that would
greatly help Pakistan meet its energy needs.
The two countries will sign the formal agreement for the multi-billion dollar
gas pipeline project, to be completed in five years, in
a third country within the next 15 days.
The project, when initially mooted in 1994, was intended to carry gas from Iran
to Pakistan and on to India. New Delhi withdrew from the talks last year over
repeated disputes on prices, transit fees and security issues. China has shown
interest in joining the strategic gas pipeline project and last year said it
would import about 1 billion cubic feet a day from Pakistan if India opted out.
Pakistan has faced severe criticism from the US over any kind of economic deal
with Iran. The change of stance from the Pakistani government and the pace of
developments at the project suggest that the strong US opposition has softened,
Dawn newspaper reported, citing official sources.
The former George W Bush administration in Washington strongly resisted the IPI
and had exerted considerable pressure on both India and Pakistan to abandon the
project. The Bush White House instead supported purchase by South Asian nations
of energy from the Central Asian republics contiguous to Afghanistan.
Geopolitical considerations and continuing security issues in Afghanistan work
against that from materializing. The present US administration of President
Barack Obama has not yet given its views on the IPI project.
Some analysts in Pakistan had suggested the government in Islamabad should
shelve the multibillion-dollar IPI project and instead invest in domestic
resources such as coal, wind and water to meet energy requirements.
Beijing has been pressuring Tehran for China's participation in the pipeline
project and Islamabad, while willing to sign a bilateral agreement with Iran,
has also welcomed China's participation. According to an estimate, such a
pipeline would result in Pakistan getting $200 million to $500 million annually
in transit fees alone.
China and Pakistan are already working on a proposal for laying a
trans-Himalayan pipeline to carry Middle Eastern crude oil to western China.
Pakistan provides China the shortest possible route to import oil from the Gulf
countries. Even so, passage over the Himalayas would be an expensive and
challenging engineering feat, and once the oil reached China it would have to
be shipped thousands of kilometers further east to coastal areas, where most
energy demand is centered.
The pipeline, which would run from the southern Pakistan port of Gwadar and
follow the Karakoram highway, would be partly financed by Beijing. The Chinese
are also building a refinery at Gwadar. Imports using the pipeline would allow
Beijing to reduce the portion of its oil shipped through the narrow and unsafe
Strait of Malacca, which at present carries up to 80% of its oil imports.
Islamabad also plans to extend a railway track to China to connect it to
The port is also considered the likely terminus of proposed multibillion-dollar
gas pipelines reaching from the South Pars fields in Iran or from Qatar, and
from the Daulatabad fields in Turkmenistan for export to world markets.
While India maintains that only issues over the IPI pipeline project are
pricing and its commercial viability, Pakistan accuses India of adopting
delaying tactics in signing a gas sales purchase agreement involving Iran,
Pakistan and India. Iran has also got tired of waiting for New Delhi to come to
terms on the proposed IPI project and last year it warned that China was eager
to step in on the deal in India's place.
Syed Fazl-e-Haider(firstname.lastname@example.org) is a Quetta-based
development analyst in Pakistan. He is the author of six books, including
The Economic Development of Balochistan (2004).