Iran-Pakistan gas pipeline project inked

[niazikhan2]

ISLAMABAD: Pakistan and Iran on Sunday finalized US $ 7.5 billion gas project dubbed as a peace pipeline to start supply of natural gas to the former from 2014.

The landmark agreement was signed by Iran's deputy oil minister Javad Ouji and Pakistani delegation including among other officials Secretary Ministry of Petroleum and Natural Resources Kamran Lashari and Managing Director Inter-State Gas Company Naeem Sharafat in Tehran.

" Now the project has entered into implementation phase and there are no further formalities left in way" Naeem Sharafat said.

He said the IP project was another testimony of the long historic andcordial relations between Pakistan and Iran," the official said.

The pipeline will connect Iran's giant South Fars gas field with Pakistan's Balochistan and Sindh provinces.

Pakistan has to construct about 700-km pipeline from the border, traversing along the Makran Coastal Highway to connect with its existing gas transmission network at Nawabshah. A 42-inch diameter pipeline is planned to be built, which is estimated to cost US$ 1.65 billion.

The project is crucial for Pakistan to avert a growing energy crisis,already causing severe electricity shortages in the country and the project would help generate around 5,000 megawatts of electricity.

Under the gas sale and purchase agreement (GSPA), Pakistan will import about 750 million cubic feet a day (mmcfd) with a provision to increase it to one billion cubic feet a day (bcfd).

The volume of imported gas will be about 20 per cent of Pakistan's current gas production and the agreement is for a period of 25 years, renewable for another five years.

Iran has the world's second largest gas reserves after Russia but hasstruggled for years to develop its oil and gas resources.

Sanctions by the West, political turmoil and construction delays haveslowed Iran's development as an exporter.

Iran state television said the pipeline was 1,000 km (620 miles) long, with about 907 km of it already built.

Pakistan-India (IPI) gas pipeline project was conceived in early nineties. However, the project could not take off for various reasons, including the new gas discoveries in Pakistan of Miano, Sawan and Zamzama, Indian concerns on pipeline security and Iranian indecisiveness on certain issues.

Pakistan would be allowed under an agreement signed in March to charge a transit fee if the proposed pipeline is eventually extended to India.

The project was revived and bilateral Iran-Pakistan Joint Working Group (JWG) was constituted and the first meeting was held on December 29-30, 2003 in Islamabad.