Iran-Pakistan gas pipeline deal: key facts and developments.

  • The Iran-Pakistan Gas Pipeline Project, also known as the Peace Pipeline, was initiated in 2010 with the aim of supplying 750 million to a billion cubic feet per day of natural gas from Iran’s South Pars gas field to Pakistan over a period of 25 years to address Pakistan’s growing energy demands.
  • The pipeline was planned to span over 1,900 kilometers, with 1,150 kilometers within Iran and 781 kilometers within Pakistan.
  • Despite Iran’s investment of $2 billion to construct its portion of the pipeline, Pakistan delayed the project, citing international sanctions on Iran as the primary reason.
  • In response, Iran urged Pakistan to fulfill its commitments, emphasizing the need for Pakistan to accelerate the project’s progress.
  • Pakistan requested a 10-year extension to complete the pipeline construction, which expires in September 2022. Failure to uphold its end of the agreement could result in a significant fine, estimated to be up to $18 billion.
  • To avoid potential penalties, Pakistan’s caretaker administration recently approved plans to commence construction on an 80-kilometer segment of the pipeline.
  • Pakistan sought a waiver from US sanctions for the project and aimed to secure Washington’s support, crucial for its ongoing negotiations with the International Monetary Fund (IMF) for a new bailout program.
  • The project is essential for Pakistan, as the country faces a shortage of natural gas, vital for domestic and industrial purposes, amid depleting reserves and expensive LNG deals, contributing to high inflation.
  • Despite possessing significant gas reserves, Iran’s development as a gas exporter has been hindered by Western sanctions, political instability, and construction delays.

The Iran-Pakistan Gas Pipeline Project remains a focal point for both nations, reflecting their mutual energy interests and the challenges posed by geopolitical factors and international sanctions.