News ID: 176579
Published: 0624 GMT January 28, 2017

Iran may cancel pipeline project with Pakistan

Iran may cancel pipeline project with Pakistan

Iran may cancel a high-profile, $7-billion 'Peace Pipeline' project with Pakistan over lengthy construction delays, thus depriving energy-starved Pakistan of some 22 million cubic meters of gas per day.

Head of National Iranian Gas Company (NIGC) Hamidreza Araqi said that if negotiations fail to come up with a way to feasibly realize the project, the project could be canceled entirely, Mehr News Agency reported.

The project has already undergone 15 years of negotiations, beginning as the Iran-Pakistan-India (IPI) gas pipeline project. Pakistan and Iran finally signed the initial agreement in 2009, while India withdrew from the deal. The deal was signed by former Pakistani president Zardari and Iranian president Mahmoud Ahmedinejad. Based on the deal, Iran was to supply 22 million cubic meters per day of gas.

Pakistan was slated to begin importing Iranian gas imports as of early 2015, but the country has not yet begun construction of the pipeline.

The project is crucial for Pakistan if they are to avert a growing energy crisis which is already causing severe electricity shortages in the country of about 170 million.

Tehran had at one point offered to provide a $500-milliom loan Pakistan, which would take in a third of the cost of Pakistan's portion of the pipeline, to start pipeline construction in Pakistani territory. This offer was later revoked due to financial problems caused by sanctions.

Pakistan’s Petroleum Minister Shahid Khaqan Abbasi recently noted that in order for the 'Peace Pipeline' to be feasible, all sanctions against Iran would have to be removed.

The deal has also been plagued by pricing disputes, with Pakistan demanding that Iran lower gas prices. Pakistan has also claimed that gas prices offered by Turkmenistan through the TAPI pipeline are lower than those proposed by Iran.

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