The Pakistani government is seeking finance for its natural gas pipeline from Iran as not many are interested in backing the project, given the threat of U.S. sanctions.
Tehran has already offered $ 500 million — out of a total of $ 2 billion required to complete it.Islamabad says it needs the rest. Federal minister for Petroleum and Natural Resources Shahid Khaqan Abbasi told The Hindu on Thursday that in this situation, only Iran could raise that amount. He added that Pakistan has asked for a meeting and is yet to hear from Iran.
The project was inaugurated in March when former Iran President Mahmoud Ahmedinejad came to Pakistan but construction is yet to begin. However, the minister said the project design was ready for execution as soon as funds were available.
Conceived in the 1990s as a “peace pipeline” the project initially had India on board and was scheduled to be completed by December 2014. Iran, which has finished most of the work on its side, has expressed concern over Pakistan’s delay in starting work. The 780 km stretch from South Balochistan to Nawabshah or Shahid Benazirabad is Pakistan’s share of the pipeline.
According to a 2010 agreement with Iran, Pakistan is expecting 750 million cubic feet of gas which could be scaled up to one billion cubic feet a day (BCFD) from the project. This, along with the proposed Trans Afghanistan Pipeline or TAPI pipeline, in which India is also involved, should be able to meet its requirement of 2 BCFD.
The Iran pipeline could be one of the issues discussed with U.S. President Obama when Prime Minister Nawaz Sharif visits him on October 23.
Mubin Saulat, managing director of Interstate Gas Systems Limited, a public sector company, said while most of the 1100km portion of the pipeline in Iran is complete, financing the project for Pakistan was a challenge. But there were other positive developments in the project for instance, the design was completed.
While the construction should have started by now, he said itnot was not rocket science and if everything falls into place, the project could be completed as scheduled by next year. “It’s challenging but not impossible,” he added.
He said Pakistan is also looking at its huge gas reserves in Sui in Balochistan and in Sindh and if the investment environment is good then there may not be a need for imported gas. At present the production of gas is 4 BCFD while the demand is six BCFD. This could double in ten to 15 years time. Pakistan uses gas — The bulk of gas usage in Pakistan is for domestic purposes; half of its energy comes from natural gas. The company was also pinning its hopes on the TAPI project which if completed in the next four to five years could deliver 1.3 BCFD.