Will Pakistan Continue Its Gas Project With Iran?

According to SAEDNEWS, A big question has emerged regarding the future of Pakistan’s joint gas project with Iran. This comes as Pakistan has recently discovered a new gas field and Iran is demanding compensation.

Pakistan is already struggling with an energy crisis, importing nearly three-quarters of its energy needs. However, news reports indicate that significant oil and gas reserves have been found in Pakistan. A senior official noted that if these resources are developed quickly, they could transform the country’s future.

Another government official mentioned that these deposits could boost Pakistan's "blue water economy" and said that bidding and exploration plans are currently in the works, likely starting soon. Muhammad Arif, a former member of Ogra, stated, “If this is a gas reserve, it can replace LNG imports, and if these are oil reserves, we can substitute imported oil.”

Despite this discovery, Pakistan was expected to complete the Peace Pipeline to import gas from Iran by 2014. Unfortunately, this project has faced delays of about ten years, largely due to US sanctions on Iran. The two countries agreed to a 25-year contract for a 781-kilometer pipeline stretching from Iran’s border to Pakistan’s Nawabshah. While Iran has completed over 1,100 kilometers of the pipeline on its side, Pakistan has not yet built any of its section.

Pakistan faces increasing pressure to finish its portion of the pipeline by 2024. If it doesn’t, it will owe Iran $18 billion in compensation. Iran has already warned Pakistan that if the project isn't completed by March 2024, it may take the issue to an international court.

After a recent visit from the former Iranian president, Javad Owji, Iran’s former oil minister shared that Pakistan is now making contracts with different companies to move the project forward. Owji expressed hope that gas exports from Iran to Pakistan could finally happen during President Raeisi’s administration.

Recently, Pakistani officials revealed that Iran plans to file a complaint for compensation due to Pakistan’s lack of progress on the project. The delays have largely been attributed to American sanctions on Iran and pressure from Washington on Islamabad.

As Pakistan grapples with the decision, it must weigh the options: pay a hefty fine after discovering new gas resources, or find a way to avoid compensation and get back on track with the gas project from Iran. The urgency of the situation highlights the importance of the gas Pakistan is looking to import for its energy security.