Pakistan looks for exit door with Iranian gas pipeline

Sanctions bite leaves so-called Peace Pipeline shelved.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   Nov. 25, 2014 at 5:57 AM
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ISLAMABAD, Nov. 25 (UPI) -- The Pakistani government has invoked force majeure on an agreement to build a cross-border gas pipeline with Iran, a ministry official said Tuesday.

A senior official inside the Pakistani Ministry of Petroleum and Natural Resources told the Pakistan Observer the government in Islamabad wanted to avoid litigation because of its decision to back away from a pipeline clouded by U.S. sanctions targeting Iran's energy sector.

"We have stepped up our efforts to get the gas deal changed and are in touch with authorities concerned in Iran and hopeful to get to result oriented talks some time in next month to resolve the issue amicably," he said.

Once dubbed the Peace Pipeline, Iran aims to establish a new natural gas route eastward with its cross-border pipeline to Pakistan. Iran said it has its side of the project completed, though sanctions and a lack of funding impeded Pakistan's ability to follow suit.

The official's comments come as Iran and six world powers failed to reach a comprehensive agreement that would end the long impasse over Iran's nuclear program.

Iran in November 2013 secured some sanctions relief in exchange for curbing its nuclear research activity. With talks extended through June, the status of sanctions on Iran is unclear.

"There is no question that we have reached the point where we are now because of the impact that sanctions have had," U.S. State Department spokesman Jeff Rathke said during his Monday press briefing. "On the other hand, sanctions alone are not going to get us the comprehensive deal."

For Pakistan, sanctions meant it was time to reconsider the pipeline with Iran.

"We have invoked the force majeure clause as it is not possible to generate required funding through international financial institutions and arrange the foreign companies' consortium to lay down the pipeline in the presence of U.S. sanctions against Iran for its nuclear ambitions," he said.

Washington and its allies favor a multilateral pipeline from Turkmenistan, which has backing from the Asian Development Bank, over Iran's project.

The four parties to the Turkmenistan-Afghanistan-Pakistan-India natural gas pipeline want to have a credible operator in place for the $10 billion project by the time members of the steering committee meet again in Islamabad in February.

The pipeline would draw from the Galkynysh natural gas field in Turkmenistan, one of the largest in the world.

Gas could reach terminal country India by 2017.

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