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Iran, Pakistan agree to set new deadline for gas pipeline

11 December, 2013

ISLAMABAD: Pakistan and Iran have agreed that their gas pipeline will not come on stream by December 2014 and have decided to set a realistic timeframe and sort out other important issues involving financing, construction period and appointment of EPC contractor.

Under the Gas Sales Purchase Agreement between the two countries, the first gas delivery to Pakistan should have started by Dec 31, 2014.The two countries are responsible for completion of the pipeline within their territories. Failure on part of a party entails penalties equivalent to the price of daily gas quantities.

Now the Iranian side has agreed not to penalise Pakistan for missing the deadline, and also to fix a new deadline based on ground realities.

Experts from both sides will meet in the current month to sort out the said issues. This has been decided by both sides in a ministerial level meeting held in Tehran on December 9, a senior official at the Ministry of Petroleum and Natural Resources told our sources.

The meeting between Pakistan and Iran was held against the backdrop of a deal signed between the P5+1 and Iran in Geneva on November 24.

The official said experts of the Inter-State Gas Company (ISGC) on the behalf of Pakistan and National Iranian Gas Exports Company (NIGEC) on behalf of Iran will thrash out all the issues, including realistic timeframe for making the project operational, strategy to raise financing and finalise the construction period of the pipeline.

A press release issued by the Foreign Office also mentions that both sides have renewed their commitment to the IP gas line project and experts of both sides would discuss the parameters to materialise the project.

When contacted, Shahid Khaqan Abbasi, Minister for Petroleum and Natural Resources, confirmed that both sides were positive about the project.

However, he declined to share information about the outcome of the talks with his counterpart held in Tehran. The minister said that he was going to hold a press briefing today (Wednesday) about his visits to Iran and Qatar for LNG imports.

The official said Pakistan delegation, headed by Shahid Khaqan Abbasi and comprising Secretary Petroleum Abid Saeed and Managing Director Inter State Gas System Mobin Saulat, held a meeting in Tehran. The Iranian side was headed by Iranian minister Bijan Namdar.

However, during the meeting, Pakistan did not raise the issue of reviewing the gas price as it was the first eye-to-eye contact at the ministerial level of both the new governments in Pakistan and Iran.

During the meeting in Tehran, Iran was hopeful that the US sanctions would soon die down as at the moment both the US and Iran are in process of agreeing on modalities to soften the US sanctions, the official said.

When asked if the offer of $500 million from Iran for laying down the gas pipeline was still there, the official said that it would also be discussed in the experts level meeting to be held soon in the current month. He said that $500 million had been offered by Iran as supplier's credit.

To a question, the official said there are some petroleum products in Iran such as LPG which were not affected by sanctions. However, on gas the sanctions are still in place.

End.

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