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Iran–Pakistan gas pipeline / Peace pipeline / IP Gas

The Iran–Pakistan gas pipeline, also known as the Peace pipeline, or IP Gas, is intended to help Pakistan meet its growing energy needs at a time when the country is facing increased blackouts and energy shortages. When completed, it would bring in enough natural gas to power 4,500 megawatts of electricity generation. That is nearly equivalent to the country’s current electricity shortfall.

The gas is to be supplied from Iran’s South Pars gas field and delivered at Pak-Iran border, near Gawadar. The project is being implemented on a segmented approach whereby each country would be responsible for construction of pipeline in the respective territory.

The pipeline will start from the onshore gas processing facility at Assaluyeh in Iran, to traverse a distance of 1,150 km upto the Iran-Pakistan border, which will be built and operated by Iran. Iran had already completed a 900-km portion of 56-inch diameter pipeline from Assaluyeh to Iran Shehr. The remaining 250 km upto the Pakistan border is under design, and is expected to be completed in two years time. The Pakistan section of the pipeline is to be laid close to the Makran costal highway from Iran-Pakistan border up to Pakistan off-take point at Nawabshah covering a distance of over 781 KM.

The Iran Pakistan Gas Pipeline Project was conceived in mid 1990’s. A preliminary agreement was signed between both countries in 1995. This agreement outlined construction of a pipeline from South Pars gas field in Iran to Karachi in Pakistan. Later Iran made a proposal to extend the pipeline from Pakistan into India. In February 1999, a preliminary agreement between Iran and India was signed.

The project was revived in 2004 and after extensive dealings, India and Pakistan came onboard on the project in February 2007 and agreed to pay Iran US$4.93 per million British thermal units (US$4.67/GJ) but some details relating to price adjustment remained open to further negotiation. In 2009 India got cold feet and withdrew from the project over security and pricing issues, and after signing a civilian nuclear deal with the United States in 2008.

Intergovernmental Framework Declaration (IGFD) on the project was signed by President of Pakistan and Iranian President in May 2009 for support of the project for early implementation by respective governments. Subsequently respective entities entered into the Gas Sale and Purchase Agreement (GSPA) on 5th June 2009, which has become effective on 13 June 2010 after completion of required Conditions Precedents.

The Chinese wer to fund 85% of the project, footing the $2-billion bill for the 485-mile Pakistani section of the pipeline. There were serious doubts about how Pakistan could raise the 1.5 billion US dollars needed to construct the pipeline. Pakistani media has also reported that Tehran had agreed to provide a 500-million-dollar loan to partially finance the construction of the pipeline on the Pakistan side, which will cost 1.5 billion dollars. Pakistan itself would shoulder the remaining cost. Iranian contractors would construct the pipeline in Pakistan.

Pakistan’s president was in Iran 03 December 2013 for a ceremony to mark the construction of a pipeline that would bring natural gas from Iran, despite US opposition to the project. President Asif Ali Zardari met his Iranian counterpart, Mahmoud Ahmadinejad as the ceremony got under way at the border. n the ground-breaking ceremony held in Iran's southeastern Chabahar city, Ahmadinejad said that the West "has no right to obstruct" Iran-Pakistan gas pipeline project. Meanwhile, the pipeline project has nothing to do with Iran's nuclear issue, Ahmadinejad stressed. The project was managed by a subsidiary of the China National Petroleum Corporation, and would take about two years to complete.

In April 2014 China shelved a plan to be part of the Iran-Pakistan (IP) gas pipeline that faced the threat of US sanctions, and offered to join the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline to meet its growing energy needs.

The US opposed the project, and instead promoted the alternative TAPI pipeline that runs from the gas fields of Turkmenistan through Afghanistan, Pakistan and then to India, even though the route required a 700 extra miles across unstable regions in Afghanistan.

Pakistani officials made contradictory statements about the progress on project, but by 2016 Pakistan had not started work on gas pipeline in its territory. The lifting of economic sanctions from Iran has brightened the chances that Pakistan would complete its side of the work on Iran Pakistan Gas Pipeline.

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Page last modified: 05-06-2016 20:50:38 ZULU