Pakistan and Iran should ink a bilateral treaty to complete Iran-Pakistan (IP) gas pipeline project and to avoid international sanctions. This was stated by Dr Abid Suleri, Executive Director, Sustainable Development Policy Institute (SDPI), Arshad Abbasi, Energy Advisor SDPI, Shaukat Hameed Khan, Vice Chancellor Center for Advanced Studies in Engineering (CASE) and Saad Saleem, Managing Director NayaTel here on Tuesday while addressing a joint press conference.
Suleri said that Pakistan's growing energy needs can be substantially met through import of gas from Iran via the IP gas pipeline project. However, there is a need to re-evaluate the gas pricing mechanism for the purpose, he added. The press conference came following the recent statement by Hamid Raza, Managing Director of National Iranian Gas Company (NIGC), suggesting that the gas price has not yet been fixed and can be reviewed if Pakistan formally requests Iran.
Regarding the anticipated international sanctions the project might draws, Suleri pointed out that Iran is already exporting gas to other countries including Turkey and Armenia. The average price of per unit electricity produced by using local gas costs five rupees while production of one power unit through IP would cost Rs 16 per unit, which is almost four times higher as compared to the domestic cost.
To a question, he said that funding options for the project would be more secure if a sovereign bilateral agreement is reached between the two countries and signed between Iran and Pakistan. Pakistan can also explore the option of exporting wheat to Iran in exchange for gas from the latter. On concerns regarding India blocking an Iran-Pakistan gas deal, he said that India is an emerging economy with higher energy needs; if a gas pipeline materialises between Iran and Pakistan, it can also be extended to India in the future.
Speaking at the press conference Arshad Abbasi said that SDPI's study on the IP gas pipeline had played an important role in generating a policy debate on the issue. He added that the report was reviewed by independent experts and requested all concerned stakeholders, including government, academia, media and intelligentsia to come forward and contribute towards a concrete policy framework particularly in the context of Pakistan's pressing energy needs.
He emphasised the need to de-link the price of gas from that of oil in international market, particularly considering Iran's willingness to reconsider gas pricing for Pakistan. Shaukat Hameed Khan said that drilling options had not yet been fully explored and utilised in Pakistan. The number of wells drilled in the country is already too low, despite Pakistan's persistent energy crisis.
He called for reform not only in the Oil and Gas Development Company but also in the Oil and Gas Regulatory Authority. He also opined that the IP project can generate economic activity in the less privileged areas of Balochistan. Saad Saleem observed that there was a need to dispel the notion that energy prices were completely linked to international oil prices, which, in turn are linked to movements in the US dollar.