India to Reconsider IPI Gas Pipeline

Indian Minister of External Affairs Salman Khurshid said India may join the multi-billion dollar Iran-Pakistan (IP) gas pipeline to import natural gas from Iran that would pass through Pakistan, Fars News Agency reported today.

The original agreement signed before the latest U.S. and EU sanctions was imposed against Iran was to build a so-called Iran-Pakistan-India (IPI) pipeline, linking Iran’s rich Assalouyeh gas field to the two countries. Iran finished its share of pipeline construction up to the Pakistani border in Iranian Baluchistan.

India reneged on the agreement, citing new sanctions imposed against developing such pipeline. Pakistan then announced that it was ready to participate in the project alone, but also backed off from the agreement last summer saying Iran could not finance the construction costs of the pipeline inside Pakistan as previously expected.

Now in light of the Geneva agreement on Iran’s nuclear program and the expectation that a comprehensive deal could be reached soon, lifting all  sanctions against Iran’s oil and gas industry, India is apparently reconsidering its position.

“If there is seriousness from all sides, we are ready to import natural gas from Iran and Central Asia through Pakistan,” Khurshid said in New Delhi on Thursday. (Fars News Agency)

Meanwhile, Turkish Energy Minister Taner Yildiz said in Ankara today that Turkey can double gas imports from Iran if the two sides could agree on a price.

The Iranian export of gas to Turkey during the sanctions, the so-called “gas-for-gold” scheme, has caused an on-going scandal in that country.

Iran Withdraws Funding to Pakistan for Gas Pipeline Project

Iran said it would not be able to finance the Iran-Pakistan gas pipeline project, Pakistan's Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi told reporters in Karachi on Thursday evening. (Platts, 13 December)


Abbasi who was on a visit to Tehran on 8-9 December said Iran could not provide the funding it had committed earlier for $500 million to build Pakistan's portion of the gas pipeline.

“However, we are committed and will make the IP gas pipeline,” Abbasi said, adding that Iran was ready to supply the gas once the pipeline is completed. (Platts, 13 December)

Iran has already invested $2 billion to build its part of the pipeline.

Pakistan, however, is finding it tough to find the funding for its part of the pipeline due to existing U.S. sanctions against Iran.

Pakistan Think-Tank Questions IP Pipeline Benefits

The Iran-Pakistan (IP) gas pipeline project under the existing gas sale and purchase agreement (GSPA) would not serve Pakistan, the country’s Sustainable Development Policy Institute (SDPI) said in a report released today.

The report entitled, “Rethinking Pakistan’s Energy Equation: Iran-Pakistan Gas Pipeline,” by Pakistan’s leading think-tank said this project can be beneficial if the gas price agreement would be based on fixed rate.

“It will be a death sentence for Pakistan’s economy if the gas is imported from Iran under IP gas pipeline project under the existing gas sales price – which is linked with the Japan Crude Cocktail price,” the report said. (The News, 24 October)

The report argues that Iran is importing gas from Turkmenistan at the flat rate of $4/MMBtu with no linkage to crude oil prices. It adds that Iran would start exporting gas to Pakistan at $14/MMBtu, with the price subject to periodic revisions based on market conditions. 

The agreement between Iran and Pakistan stipulates construction of Pakistan’s side of the pipeline by December 2014. If the Pakistani government is serious about this project, it must renegotiate the price, SDPI recommends. The publication of the report is the first sign of a problem in implementation of the IP project under the new Nawaz Sharif government. The agreement was negotiated during Zardari administration.

File photo: IP gas pipeline under construction on the Iran side of the border (IRNA)

Zardari in Tehran

Khamenei Tells Zardari IP Pipeline Must Advance 

Iran's Supreme Leader Ayatollah Ali Khamenei on Wednesday urged the visiting President Asif Ali Zardari to press ahead with a much-delayed $7.5 billion Iran-Pakistan (IP) gas pipeline project despite U.S. opposition, The News of Pakistan reported today.

“The Iran-Pakistan gas pipeline is an important example of Tehran-Islamabad cooperation, and despite hostilities towards the expansion of ties we must overcome this opposition decisively,” Khamenei told Zardari. (The News, 27 February)

“Accessing safe energy source is the first priority for any country including Pakistan. In this region, the Islamic republic is the only nation that has safe energy resources and we are ready to provide Pakistan its energy needs,” Khamenei added.

Zardari also met with Iranian President Mahmoud Ahmadinejad.

Photo credit: Iran's Supreme Leader Ayatollah Ali Khamenei (right) and Pakistani President Asif Ali Zardari. Leadership House, Tehran. 27 February (The News)

Iran to Build Refinery, Supply Gas to Pakistan Iran to Build Refinery, Supply Gas to Pakistan

In Food Barter, Iran to Accept Wheat, Meat, Rice as Payment

Iran has agreed to help build an oil refinery for Pakistan and supply it with natural gas in a barter deal for food, Fars News Agency reported today.

Iran, which has huge reserves of natural gas but exports little, partly due to sanctions, has also agreed to complete Pakistan's part of a long-planned Iran-Pakistan (IP) gas pipeline and accept payment in food for gas supplied through it.

The IP will be a 750-km long pipeline across Pakistan and will deliver 21.5 million cubic meters of gas per day. The construction is expected to be completed by December 2014.

“We had very good meetings and we had a lot of bilateral talks especially on Iran-Pakistan gas pipeline project and setting up oil refinery at Gwadar with PSO (Pakistan State Oil)," a Pakistani official, Asim Hussain, was quoted by Iran's state news agency IRNA as saying after a meeting with Iranian oil minister Rostam Qasemi.

Pakistani President Asif Ali Zardari would sign the memorandum of understanding for the 400,000 barrel per day refinery at Gwadar during a visit to Tehran next week.

File photo: Iran-Pakistan Pipeline under construction on Iranian side (IRNA)