Pakistan, Iran sign gas pipeline deal

Officials from Pakistan on Sunday finally signed a gas pipeline accord with Iran, without India’s participation, after 14 years of on-off negotiations over what was initially framed as the Iran-Pakistan-India (IPI) gas pipeline project.
Under the gas sale purchase agreement signed between the Iranian National Oil Company and Interstate Gas System of Pakistan, Iran will provide 750 million cubic feet of gas per day to Pakistan for the next 25 years. Officials in Islamabad termed the deal a major breakthrough and an achievement that would greatly help Pakistan meet its energy needs.
The project, when initially mooted in 1994, was intended to carry gas from Iran to Pakistan and on to India. New Delhi withdrew from the talks last year over repeated disputes on prices, transit fees and security issues. China has shown interest in joining the strategic gas pipeline project and last year said it would import about 1 billion cubic feet a day from Pakistan if India opted out.

Beijing has been pressuring Tehran for China’s participation in the pipeline project and Islamabad, while willing to sign a bilateral agreement with Iran, has also welcomed China’s participation. According to an estimate, such a pipeline would result in Pakistan getting $200 million to $500 million annually in transit fees alone.

China and Pakistan are already working on a proposal for laying a trans-Himalayan pipeline to carry Middle Eastern crude oil to western China. Pakistan provides China the shortest possible route to import oil from the Gulf countries. Even so, passage over the Himalayas would be an expensive and challenging engineering feat, and once the oil reached China it would have to be shipped thousands of kilometers further east to coastal areas, where most energy demand is centered.

The pipeline, which would run from the southern Pakistan port of Gwadar and follow the Karakoram highway, would be partly financed by Beijing. The Chinese are also building a refinery at Gwadar. Imports using the pipeline would allow Beijing to reduce the portion of its oil shipped through the narrow and unsafe Strait of Malacca, which at present carries up to 80% of its oil imports. Islamabad also plans to extend a railway track to China to connect it to Gwadar.

Asia Times