Pakistan, Iran agree to discuss implementation of IP gas line

ISLAMABAD: Pakistan and Iran have agreed to discuss the way forward for implementation of IP gas line and to this effect the authorities concerned of both the countries will hold curial parleys in Tehran either by end of the current month or in early next month.

The way forward will be worked out for materializing the project in the presence of US sanctions and in addition the new time lines for the project will also be discussed, a senior official at Petroleum Division told The News.

In the wake of the price at which Pakistan is procuring the LNG from Qatar and is having through spot purchasing and the price of gas settled under TAPI line, the both sides would also review the gas sales purchase agreement including the penalty clause that was inked between Pakistan and Iran in 2009.

The new development of the agreement from both sides to initiate talks has got paramount significance particularly when Iran had threatened to move the arbitration court following the shelving of IP project by the Nawaz government, the official said. The ice melted when Iranian Foreign Minister Javad Zarif visited Pakistan in March, 2018 and held meetings with top political and military leadership. He raised the issue of shelved IP project with Pakistan’s prime minister in the meeting.

“Now both the parties have decided to find out the way forward for implementation of the project knowing the fact that there are still the US sanctions and Trump’s resolve to do away with the nuclear deal earlier done with the USA during the Obama regime.”

It is pertinent to mention that Pakistan and Iran signed GSPA in 2009 under IP gas pipeline project in the era of Pakistan Peoples’ Party. Since then the project could not get the shape. The News had already in its edition of February 28, published the story saying that Iran has threatened to move arbitration against Pakistan for unilaterally shelving the project.

Tehran while threatening Pakistan had asked for the payment of over $1.2 billion as under the penalty clause from January 1, 2015, as Pakistan is bound to give penalty of $ 1 million per day if it fails to have intake of gas from Iran under IP project.

The News on June 7, 2016 published a story that Pakistan had shelved the IP gas line project in the wake of the pressure of the leading gulf country. The decision had irked authorities in Iran at that time, but now in latest development Iran after pause of 20 months has conveyed to Pakistan in plain words that it is going for arbitration seeking the huge penalty of $1.2 billion which is equal to almost the cost of the project.

The project was to be implemented under segmented approach meaning by that Iran had to lay down the pipeline on its side and Pakistan had to build the pipeline in its territory. The project was to be completed by December 2014 and come on stream from January 1, 2015. Under the penalty clause it was agreed by both sides that if Pakistan fails to have intake of Iranian gas from January 1, 2015, it will have to pay $1 million per day as penalty.

When this scribe had filed the story on June 6, 2017 saying the IP project has been shelved, Shahid Khaqan Abbasi was at that time Petroleum and Natural Resources Minister had confirmed that the government has deferred the project as government wants the private sector to invest in the LNG terminals and import LNG in the country and to this effect.