The gas pipeline project with Iran has been suspended by Pakistan. Iran was informed that the execution of the project is unlikely as long as US sanctions are intact in Tehran.
Inter-State Gas Managing Director Mobin Saulat said, “Under present US sanctions on Iran, it is impossible to execute the Iran-Pakistan gas pipeline project and we have conveyed it to Iran in writing recently.”
Pakistan and Iran initiated a new round of negotiations back in February as Tehran issued Pakistan a notice for not laying down the pipeline in the Pakistani territory within the timeframe decided in the bilateral agreement.
Saulat said that Pakistan still wants to implement the project once global sanctions on Iran are lifted. He said that Pakistan will not risk US sanctions by continuing the project.
As for the legal notice issued by Iran, Saulat said that Pakistan has time till August 2019 to respond to it legally. He said that he is hopeful that the issue would be resolved by negotiations.
However, the viewpoint of Iranian authorities is that the US sanctions are not applicable to the IP gas project.
The Pakistan-Iran gas pipeline project was signed back in 2009 and it was expected that it would be completed by December 2014. It would deliver 21.5 million cubic meters of gas daily to Pakistan. It was decided that Pakistan would lay the pipeline on its side and Iran would build on its side.
Now Pakistan has to pay $1 million daily to Iran from 1st January 2015 under the penalty clause of Gas Sales Purchase Agreement, as it failed to build its part.