Pakistan Begins Work on Iran-Pakistan Gas Pipeline Segment Despite US Sanctions

Time to read
1 minute
Read so far

Pakistan Begins Work on Iran-Pakistan Gas Pipeline Segment Despite US Sanctions

Flag of Pakistan (© Shutterstock/A Kisel)
Flag of Pakistan (© Shutterstock/A Kisel)

Pakistan has begun construction on an 80-kilometer (49-mile) section of the Iran-Pakistan (IP) gas pipeline within its territory, despite concerns from the United States over violating sanctions on Iran.

Foreign Ministry spokesperson Mumtaz Zahra Baloch said last Thursday, March 7, that the project is moving forward "in conformity with our commitment to the Iran-Pakistan pipeline." 

She added that Pakistan sees no reason for objections from third parties since the construction is happening solely inside Pakistani territory.

Initiated in 2013, the project required Pakistan to complete its portion by the end of 2014. 

Delays have frustrated Iran, which has already invested $2 billion in its section of the pipeline, and Pakistan could face an $18 billion penalty if it terminates the agreement.

The government has assigned the Inter State Gas Systems (ISGS) company to handle construction. 

It will use funds from a dedicated gas infrastructure development fund established during the previous Pakistan Peoples Party (PPP) administration (2008-2013).

Officials say the project is being prioritized due to a growing gap between gas demand and supply, with piped gas seen as a more cost-effective alternative to imported liquefied petroleum gas (LPG).

Former foreign secretary Salman Bashir expressed support for the project, highlighting Iran's gas reserves and Pakistan's energy needs. He emphasized the importance of prioritizing relations with neighboring countries.

However, a member of the Pakistan Muslim League-Nawaz (PML-N) economic team raised concerns about US sanctions. 

They noted the challenges banks involved in financing the project would face due to potential difficulties clearing transactions, particularly in New York.

The official pointed to the recently completed Iran-Gwadar electricity transmission line as an example of creative problem-solving and suggested a similar approach for the IP pipeline project by focusing on the smaller, 80-kilometer segment within Pakistan.

Dr. Nadeem Javed, a former chief economist, cautioned about the risks associated with the project, citing Pakistan's reliance on the International Monetary Fund (IMF) and the volatile foreign exchange situation. He expressed doubts about the project's long-term viability, given these economic factors.

Add new comment

The content of this field is kept private and will not be shown publicly.

Text only

  • No HTML tags allowed.
  • Lines and paragraphs break automatically.
  • Web page addresses and email addresses turn into links automatically.
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.