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Pak might opt out of IPI project

With prospects of any agreement with India still hanging, Pakistan might also opt out of the proposed $7.4 billion tripartite gas pipeline project with Iran.

business Updated: Jan 15, 2009 15:00 IST

With prospects of any agreement with India still hanging, Pakistan might also opt out of the proposed $7.4 billion tripartite gas pipeline project with Iran.

Pakistani authorities might recommend to parliament to abandon the proposed Iran-Pakistan-India gas pipeline project as Tehran is demanding higher gas prices, a media report said on Thursday.

With Iran seeking an "exorbitant" $10 to 11 per mmbtu of gas from Pakistan, the authorities believe the project is no longer economically viable for the country, an unnamed petroleum ministry official told The News daily.

The recommendation to abandon the project may be made during a meeting on Thursday of a steering committee chaired by Asim Hussain, the Adviser to the Prime Minister on Petroleum.

The committee is set to discuss the pros and cons of the "irrational demand" of Iran with regard to gas prices and other related issues.

After framing recommendations for the future strategy for the pipeline project, the committee will sensitise parliament on the issue and leave it to the House to decide to either continue the dialogue with Iran or to quit the project.

The official said Pakistan and Iran had earlier agreed on a price of $6.66 per mmbtu of gas in December 2007.

The petroleum ministry briefed Prime Minister Yousuf Raza Gilani about three months ago and advocated "abandoning the project keeping in view the irrational demands of Tehran".

In that meeting, the ministry recommended the government should instead go in for "aggressive exploration and production of oil and gas" within Pakistan.