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May 8, 2018

Pakistan invites Iran to hold talks on IP gas line


May 8, 2018

ISLAMABAD: Pakistan has extended an invitation to Iran for holding crucial talks on the most import project of the IP gas pipeline that was earlier unilaterally shelved by the government.

“Yes, we have invited authorities concerned in Tehran to come in Islamabad in the ongoing month of May, prior to the advent of the holy month of Ramazan, and hold talks on [the] IP gas line project,” a senior official at Petroleum Division (Energy Ministry) told The News. “The petroleum division has invited the Iranian authorities on the orders of the Prime Minister Shahid Khaqan Abbasi.”

Both sides would put their heads together to find out the way out how to proceed for implementation of the project in the presence of the US sanctions and hawkish attitude of the Trump administration. President Trump is hell bent upon the deviating from the US-Iran nuclear deal earlier done during Obama regime. So under the new scenario, the top mandarins of both the countries would also work out new timelines for the project’s completion.

Pakistan and Iran have already agreed to open up and review the gas sales purchase agreement (GSPA) inked between the two in 2009 following the reduction in the prices at which Pakistan is procuring the LNG from Qatar and is having the imported product through spot purchasing and the price of gas settled under TAPI gas line. Pakistan and Iran signed GSPA in 2009 under IP gas pipeline project in era of Pakistan People’s Party. Since then the project could not get the shape. Tehran had already indicated to authorities concerned in Islamabad saying it has made up its mind 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 $01 million per day if it fails to have intake of gas from Iran under the IP project. The IP 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.

To avoid the US sanctions, the official said, earlier Petroleum Ministry headed by Federal Minister Shahid Khaqan Abbasi who is now the Premier of Pakistan had carved out the plan under which LNG pipeline was planned to be laid down from Gwadar to Nawabshah. Two LNG terminals were also planned at Gwadar Port and to this effect a Chinese company had been awarded the contract and the said Chinese company had also arranged the financial supply chain for completing the project.

Iran was told that whenever the sanctions are to be erased, then the pipeline will be extended to Iranian border from Gwadar and then it will be called as IP gas line. “But the shelving of the project of LNG pipeline from Gwadar to Nawashah irked both Iran and China which is why Iran conveyed Pakistan that it is going for arbitration against Pakistan. So keeping in mind the said back ground the talks that are to be held between Pakistan and Iran would be of paramount importance.”

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