Gass pipeline agreement, Pakistan wants to terminate , Iran wants 10-year extension

Pakistan wants to terminate gas pipeline agreement, Iran wants 10-year extension
Islamabad:
Pakistan has asked Iran to terminate the Pak-Iran gas pipeline project through an out-of-court settlement, but instead of terminating it, Iran has agreed to extend the agreement for ten years.

Work on the Pak-Iran gas pipeline has been stalled since 2014 due to US sanctions. Iran extended the agreement for 10 years and is ready for another ten-year extension, but Pakistan wants to terminate the agreement due to low gas demand and US sanctions.

Sources said that Pakistan wants to extend the agreement if the US gives a discount and Iran reduces both the price and volume of gas.

According to the report, the two countries have been in backdoor diplomatic contact since Iran’s legal action over its failure to implement the pipeline agreement. The issue was also raised with senior Iranian figures visiting Pakistan.gass pipeline agreement

Officials said that Pakistan had asked Iran to terminate the agreement long ago due to US sanctions; In addition, due to low demand, the country already has a gas surplus, so LNG deals with Qatar for 2026 were canceled; Iranian gas is also more expensive than LNG.

Sources said that waivers were sought from the US in the past to implement the agreement, but were refused. Iran claims that it has done its part of the work on the project, Pakistan has yet to start.

US State Department spokesman Matthew Miller has said that those considering trade agreements with Iran should be aware of the implications, Pakistan has previously tried to work on an alternative means of implementing the Pak-Iran gas project.

According to sources, under the alternative plan, Pakistan wanted to lay an LNG pipeline to Gwadar and extend it to the Iranian border, but the plan was abandoned due to pressure from US sanctions.

LNG imported from Qatar for the power sector was not fully utilized, which resulted in an abundance of gas.

The government has announced to provide low-cost electricity to the agricultural and industrial sectors to increase the use of LNG in the power sector and has lifted a ten-year ban on giving new connections to domestic and commercial consumers.

Officials said that the aim is to solve the problem of surplus LNG reserves by increasing its use, however, consumers with new connections will get gas at LNG rates.