Pakistan to ask Iran for relaxation on gas project deadline

• Pakistan's delegation will hold talks in Tehran today.
• Islamabad will have to pay $18 billion penalty after deadline.
• Consultants say US sanctions not to impact Pakistan's economy. 

ISLAMABAD: Pakistan will ask Iran on Tuesday to provide relaxation on the Feb-March 2024 deadline to avert the penalty of $18 billion for not laying down a pipeline in its territory, The News reported. 

Iran asked Pakistan last year to construct a portion of the Iran-Pakistan (IP) gas line project in its territory till February-March 2024 or pay a $18 billion penalty.

Pakistan was supposed to lay down the 781-kilometre pipeline from the Iranian border to Nawabshah and start consuming 750 million cubic feet of gas daily. Tehran has already laid a pipeline from a gas field to the point bordering Pakistan.

“Pakistan’s delegation will hold talks in Tehran today (November 14, 2023) with Iranian authorities and request them not to move the international arbitration seeking the imposition of an $18 billion penalty. Energy Minister Muhammad Ali may reach Tehran today (Tuesday) but it depends upon the clearance by the PM office. However, relevant officials have reached Tehran. The Energy minister arrived back today (Monday) from Kyrgyzstan,” senior officials of the Energy Ministry told The News.

"Pakistan will also sensitise Iranian authorities of endeavouring to implement the IP gas line through a third party to avoid the US sanctions imposed against Iran for its nuclear ambitions. The government has also approached the relevant US departments to find out about the impact of curbs but they have not responded citing a lengthy process to analyse the impact. The French consultants are of the view that US sanctions will have no impact on Pakistan’s economy,” the officials said.

The Inter-State Gas Systems (ISGS) of Pakistan and the National Iranian Gas Company (NIGC) signed a revised agreement in September 2019 for the pipeline. Under this accord, Iran would not approach any international court for any delay till 2024. Afterwards, Iran would be free to move to France-based international arbitration and seek an $18 billion penalty.

The officials said that Iranian authorities will be sensitised about Pakistan’s endeavours to restructure the IP gas pipeline project to avert the US sanctions. 

“Under the new option, Pakistan may not purchase the gas directly from Iran but through a third party. Iranian authorities are also on the board for the proposal.” 

Since Pakistan cannot afford US sanctions it is pedalling very carefully to implement the project,” the sources said.