Is Iran's gas on tap for Pakistan?

Iran's state media reports Islamabad considering long-shelved gas pipeline.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   July 20, 2015 at 6:12 AM
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ISLAMABAD, July 20 (UPI) -- If sanctions are removed in full, Pakistan could in theory move forward with implementing a bilateral natural gas pipeline project with Iran.

Once dubbed the Peace Pipeline, and including India as the terminal country, Iran has long held out its gas reserves as an opportunity for Eastern trading partners. Washington and its Western allies, however, have backed a rival project that would stretch from one of the world's largest natural gas fields in Turkmenistan through Afghanistan, Pakistan and India.

For Pakistan, sanctions targeting Iran's energy sector meant it was time to reconsider the pipeline project.

"Removal of sanctions will facilitate us in meeting our commitments and addressing our energy needs," Pakistani Energy Minister Shahid Khaqan Abbasi was quoted as telling the official Islamic Republic News Agency.

Iran, the five permanent members of the U.N. Security Council, plus Germany, finalized a deal July 14 that restricts Tehran's nuclear ambitions in exchange for relief from sanctions targeting its energy sector.

A June report from the U.S. Energy Information Administration finds Iran's natural gas sector has done better when compared to the oil sector under sanctions. Iran exports only small quantities of natural gas because most is consumed domestically.

Pakistan last year declared force majeure on the project, saying it was unable to generate revenue needed for the development of the project because of sanctions.

Pakistan's aging infrastructure means the country lacks a reliable power sector. The Asian Development Bank in the past has lent its support to the multilateral natural gas pipeline that would strength from Turkmenistan rather than Iran.

Iran said it completed its end of the project more than two years ago.

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