IP gas pipeline project: Work begins ahead of Iran president’s visit

ISLAMABAD: Iranian President Ebrahim Raisi is expected to visit Pakistan on April 22, as Ministry of Energy has started work on Pakistan-Iran Gas Pipeline Project.

The authorities concerned have started working to materialise 80-km pipeline from Gwadar to a point where it will get connected with the pipeline in Iranian territory.

Pakistan-Iran Gas Pipeline Project is estimated to be completed in 24 months at a cost of Rs44 billion and it will seek a significant allocation from the Petroleum Division in the 2024-25 budget from the Public Sector Development Programme (PSDP), as the Finance Ministry is expected to be unable to provide the necessary funds from the Gas Infrastructure Development Cess (GIDC) head.

Iranian President due next month

A senior official from the Energy Ministry stated that the Inter-State Gas Company (ISGS) has issued tenders to seek re-validation of surveys and Front-End Engineering Design (FEED) by consultants, a process that has been long delayed.

The development occurs amid explicit opposition from the United States to the bilateral project, along with warnings of potential sanctions. The project has faced nearly a decade-long delay since its intended completion in December 2014, followed by operationalisation in January 2015.

Despite Pakistan’s assertion that the project could not moved ahead due to US sanctions on Iran, Tehran has consistently maintained that these sanctions are unjustified. Tehran issued a final notice to Pakistan in January for completion of its portion of the pipeline by February-March 2024, or face an $18 billion penalty under the penalty clause of the Gas Sales Purchase Agreement (GSPA) for the 781-kilometer project.

The official emphasised the urgency of laying the 80-kilometer pipeline section to avoid arbitration in France, which could result in Pakistan being liable for the aforementioned penalty.

Initially, the 80-kilometer pipeline section is expected to handle 100 million cubic feet per day (mmcfd) gas, compared to the anticipated 750 mmcfd for the project’s 25-year duration.

After completion of this process, authorities will proceed with land acquisition, followed by the awarding of Engineering, Procurement, and Construction (EPC) contracts.

Copyright Business Recorder, 2024