Building a pipeline from Iran may help Pakistani energy issues, but it won't be a cure-all for chronic woes, analyst says. UPI/Hamid Forotan/ISNA | License Photo
BATH, England, July 30 (UPI) -- Completing a natural gas pipeline from Iran won't be the "silver bullet" expected by the government in Islamabad, analysis finds.
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. For Iran, it may open the spigot on natural gas reserves, which could help address chronic energy shortages in neighboring Pakistan.
Oliver Coleman, deputy head of Asia programs at analytical firm Verisk Maplecroft, said in a briefing that while both sides of the pipeline have lauded its benefits, it won't address the long-term issue completely.
"A steady supply of gas from Iran would not be a silver bullet for Pakistan's energy crisis," he said. "Woeful energy sector governance is perhaps an even more debilitating factor than supply, with risks including rampant theft, poor maintenance, and transmission and distribution losses of around 20 percent."
Even if the pipeline is completed in Pakistan, Coleman said national distribution networks likely wouldn't be able to handle the additional volumes of natural gas coming from Iran.
The Asian Development Bank in February said it was supporting efforts to help Pakistan build its first liquefied natural gas terminal with a $30 million loan. With the LNG facility, the bank said the Pakistan government would save about $1 billion per year on its fuel import bills.
The ADB in the past has lent its support to a multilateral natural gas pipeline that would stretch from Turkmenistan, an option favored by the U.S. government over the Iranian project.
Pakistan last year moved away from the Iranian gas pipeline project, saying it was unable to generate revenue needed for the development of the project because of sanctions. Coleman said its completion, however, could fill some gaps in the Pakistani energy sector because Iranian natural gas could be "significantly" less expensive than LNG imports.