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Doubts persist over Pakistan-Iran gas pipeline

Tehran's insistence on a clause in the GSPA under which the gas prices would be reviewed after every five years remains the bone of contention.

business Updated: Oct 02, 2007 17:15 IST

Pakistan and Iran might have agreed on constructing a gas pipeline between the two countries but the deal is far from being signed, sealed and delivered.

Tehran's insistence on a clause in the Gas Sales and Purchase Agreement (GSPA) "under which the gas prices would be reviewed after every five years remains the bone of contention as Pakistan refused to budge before the Iranian demand", The News reported on Tuesday in a dispatch headlined "Pakistan, Iran fail to clear snags in gas pipeline deal".

Iran has also made two other demands, which, however, have not been revealed.

"We have bought some time to respond to the Iranian demand after consultations with (Pakistan's) top leadership," it quoted Furrukh Qayum, secretary in the Pakistani petroleum and natural resources ministry, as saying.

Qayum led the Pakistani delegation at the four-day talks in Tehran late last month on the $7.4 billion project involving the export of Iranian gas via Pakistan to India. New Delhi did not participate in the crucial discussions, as it still has to resolve transit fee issues with Islamabad.

"Now the Iranian team is expected to arrive in Islamabad in the third week of October to further hold talks to settle the bottlenecks," the official added.

According to The News, Iranian authorities have told Pakistan that Tehran is "very close" to finalising gas sale agreements with four other countries -- Armenia, Switzerland, Turkey and the United Arab Emirates -- incorporating the five-year escalation clause.

Iran maintains that "the world can experience any volatile situation in the gas sector so it is imperative to include (an escalation) clause in the agreement".

According to Qayum, "We will place three terms from (the) Iranian side (including the escalation clause) at a meeting of the steering committee on gas to be held within a few days".

He declined to reveal the other two terms, saying it was not the "appropriate time" to do so.