Gas price under the Iran-Pakistan (IP) project is the most attractive at $11 per Million British Thermal Unit (mmbtu) compared to $13 per mmbtu from the US supported Turkmenistan-Afghanistan-Pakistan-India and Liquefied Natural Gas (LNG) at $18 per mmbtu.
Discussions with the government officials and market sources revealed that IP gas pipeline project is not only immediately possible but would also provide the cheapest possible imported gas for Pakistan. The price of LNG is considerably more expensive - $7 per mmbtu - and TAPI remains a challenge due to divergent geopolitical considerations of major world powers including US, Russia and China that are active in that region.
IP pipeline is planned to be laid along the Balochistan coastline up to Nawabshah, Sindh from where it will be linked to the national gas transmission network. Iran has stated that it has already built a 900 kms pipeline of 56-inch diameter from the Assulyah gas processing facility to Iran Shehar.
Pakistan as per the project documents committed to obtain 750 Million Cubic Feet per Day (mmcfd) from the IP gas pipeline, 1.25 billion Cubic Feet per Day (bcfd) from TAPI project and 500 mmcfd from import of LNG. A petroleum ministry official said that Iran has to build only 250 kilometres of the pipeline to reach the Pakistan border.
The official also revealed that to attract foreign as well as local investment in the oil and gas sector of the country the government has approved an increase in the existing wellhead gas price by $2 per mmbtu - from $4 per mmbtu to $6 per mmbtu. Sources elaborated that the funding for and construction of the IP gas pipeline are big challenges considering the existing US-led sanctions on Iran. However, the interest evinced by the Russian oil and gas giant Gazprom in the construction of the pipeline was a positive sign. At present Pakistan's gas production is estimated at 4.2 bcfd however the country's total requirements are 6.2 bcfd.