Iran and Pakistan have extended the completion date of Iran-Pakistan (IP) Gas Pipeline project from December 2014 to December 2015, senior Petroleum Ministry officials told Business Recorder. During the recent visit of Prime Minister Nawaz Sharif to Iran, the two countries held in-depth discussions on the completion of IP gas line and agreed to extend the completion date by one year, Petroleum Ministry officials told Business Recorder here on Monday.
On May 24, 2009 Iran and Pakistan signed a bilateral treaty titled Intergovernmental Framework Declaration while on 5 June 2009 Inter State Gas System of Pakistan (ISGS) and National Iranian Oil Company of Iran signed the Gas Sale Purchase Agreement (GSPA), which envisaged the first flow of gas to Pakistan to commence by December 31, 2014.
"During Nawaz Sharif's recent visit to Iran the impression that Pakistan might abandon the $1.5 billion project due to pressure from the US, Saudi Arabia and some other oil-rich states was dispelled. We are really serious about constructing the pipeline as we desperately need gas to meet our local requirements. Besides IP gas, we are also progressing on Turkmenistan-Afghanistan-Pakistan and India (TAPI) gas pipeline project, which will bring 1.325 Billion Cubic Feet Gas per Day to Pakistan and India and 500 Million Cubic feet per Day to Afghanistan," the official stated.
The sources stated that the two leaders had accepted the fact that the gas pipeline would not come on stream by December 2014 following the imposition of sanctions on Iran by the world powers. Iran has now agreed to extend the timeframe for the construction of the much-needed gas supply to energy-starved Pakistan. The two countries are responsible for completion of the pipeline within their territories. Failure on the part of one party entails penalties equivalent to the price of daily gas quantities that is around $3 million for every day's delay in completion of the project. Iran could also have claimed billions of dollars in compensation for any breach of contract.
Iran laid the pipeline on its side by investing $2 billion but Pakistan failed to lay the pipeline on its side of the border. Pakistan had invited bids but no company participated in it. Iran committed two tranches of $250 million each to lay Pakistan's portion of the pipeline but recently it declined to provide financing, saying it was ready to provide gas but would not provide funds for Pakistani portion of the project. IP gas pipeline project is projected to initially bring 750 MMCFD of gas at an estimated cost of $13 per MMBTU which may be extended to 1 Billion Cubic Feet per Day (BCFD).
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