Pakistani Minister for Petroleum and Natural Resources Minister Shahid Khaqan Abbasi said Iran pulled out of a $500 million finance commitment because of the sanctions constraints, the Pakistani newspaper the Express Tribune reported Friday.
"The compressor equipment required [for the pipeline] would not be available due to sanctions against Iran," he was quoted as saying. "However, we are committed and will make the Iran-Pakistan gas pipeline."
The Pakistani government said the aging infrastructure in the country means it needs outside help to keep up with energy demand.
Iran said construction on its end of the pipeline is making progress and had offered financial support to Pakistan to help build it on its side of the border.
The U.S. government supports a rival pipeline that would deliver natural gas to Pakistan from Turkmenistan. The Pakistani minister said his government was still interested in that project.
Abbasi added discussions were ongoing on the option of importing liquefied natural gas from Qatar to help meet Pakistan's energy needs.