ISLAMABAD: Iran refused to accept the force majeure notice served by Pakistan to suspend work on the multi-billion-dollar Iran-Pakistan (IP) gas pipeline project.
Addressing media persons here on Wednesday, State Minister for Petroleum Division Dr Musadik Malik clarified that Pakistan had issued a force majeure notice to Iran under the Gas Sales and Purchase Agreement (GSPA) which Iran did not accept and granted two five-year extensions to meet the obligations in IP project.
The state minister insisted that Pakistan had issued a forced majeure notice 10 years back which Iran did not accept.
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He categorically denied the written answer given in the question-answer session of the National Assembly that Pakistan has issued a forced majeure notice right now.
He said Iran had extended time to meet the obligations in the project till March 2024 and Pakistan had been engaged with the Iranian side for a positive solution and also in contact with international forums for the waiver of sanctions for the import of energy from Iran.
The Pakistan government was engaged with US authorities through diplomatic channels to seek an exemption from sanctions for the gas project, he added.
Malik said work on the pipeline was stalled due to US sanctions on Iran as the US administration did not grant a waiver for the import of petroleum products from Iran and project activities would begin once the ban was removed.
He maintained that the US administration did not grant waivers to Pakistan to import petroleum products from Iran like it had given to China, India, Japan, South Korea, and some other countries.
Under a penalty clause, Pakistan is bound to pay $1 million per day to Iran from January 1, 2015, for failing to complete the pipeline’s construction on its territory. However, the minister denied and said that there was no penalty in the GSPA as it was based on take and pay.
“In case Pakistan does not meet the contractual obligations then Iran would determine the penalty amount through a legal court of law,” he insisted. He said that Iran was facing two types of sanctions from the US and the UN.
He said that US sanctions were strict and therefore, Pakistan did not want to face sanctions.
“We are now actively engaged with Iran and all other stakeholders to find out the right way,” he added.
Musadik Malik presented insights into Pakistan’s energy landscape, shedding light on ongoing and planned projects. Malik provided a review of the country’s energy endeavours, addressing concerns and discussing accomplishments.
According to Malik, while Russian oil has yet to have a big impact on the population, its arrival is expected in the near future. He emphasized his participation in improving gas supply, highlighting the addition of 16.4 million cubic feet of gas per day to the system over 14 months, with an additional 13.2 million cubic feet per day projected within six months.
Malik elaborated on Pakistan’s energy diversification initiatives by mentioning the monthly delivery of LNG shipment from Azerbaijan. He emphasized the country’s ability to determine whether to accept the cargo depending on its cost-effectiveness.
He also discussed plans for additional oil and gas exploration blocks, as well as the implementation of a strict gas strategy in Pakistan.
Malik revealed a $12 billion planned investment in a refinery, facilitated by a Middle Eastern country. He emphasized that, while Russian oil has yet to benefit the public, it is on the way.
Malik explained that the rumour about Pakistan being fined for the Iran-Pakistan gas pipeline project is false. He stated that the subject of fines imposed by international sanctions was settled a decade ago. He emphasized the necessity of finding a solution to the project without resorting to sanctions, underlining energy’s critical role in Pakistan’s growth.
Malik reflected on his achievements as Minister of State for Petroleum, noting that during his time, 164 mmcfd of gas was added to the system, resulting in significant savings from LNG usage. Within the next six months, he expects to add an additional 132 mmcfd of gas.
Malik emphasized the government’s attempts to differentiate gas pricing for different income categories, assuring a more equitable approach. He acknowledged the difficulties in resolving the cycle debt of LNG and highlighted initiatives targeted at optimising energy management.
Copyright Business Recorder, 2023
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