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Pak, Iran to go ahead with pipeline project

Pak Petroleum Secy Ahmad Waqar said the two nations will go ahead with the project regardless of India's involvement.

india Updated: May 01, 2006 11:51 IST

Both Pakistan and Iran have agreed to go ahead with a bilateral gas pipeline if India does not join the project to bring cheap Iranian gas to South Asia.

At the conclusion a three-day technical talks between Pakistan and Iran on Sunday, both the countries said the project will forge ahead despite US reservations.

Pakistan Petroleum Secretary Ahmad Waqar, who headed his side at the talks told reporters here that Pakistan and Iran had reached an agreement on basic principles of a gas pricing formula and decided to work on a bilateral Iran-Pakistan pipeline regardless of India's involvement in the project.

Waqar also played down the threat of sanctions against Iran.

"Pakistan is viewing this project keeping in view its national interests. We need energy to sustain economic growth," Daily Times quoted Waqar as saying.

Waqar said that a "broad-based agreement" had been reached on pricing. However, Pakistan and Iran will continue to examine each other's proposals on pricing, he said, adding that Iran would provide a Gas Sales Purchase Agreement (GSPA) to Pakistan in a week and "we will reciprocate as early as possible".

Both sides agreed to a project structure wherein gas would be delivered at the Iran-Pakistan border under a supply agreement, the daily reported.

Waqar said the pipeline will run through the Bhong area in Rahim Yar Khan district.

He said they also agreed to enhance off-take volume from 2.1 billion cubic feet per day (bcfd) to 2.8 bcfd in case the project was implemented bilaterally.

Iran's Deputy Oil Minister Mohammad Hadi Nejad Hosseinian, who headed an eight-member Iranian team at the talks, said he did not expect United Nations sanctions due to its nuclear programme to affect the gas pipeline to India and Pakistan or the country's oil and gas sector.

"Oil prices are very high. Sanctions against Iran extending to its energy sector will push oil prices further up in the international market.

The world cannot afford such a hike in oil prices," the daily quoted Hosseinian as saying, after the two sides signed a joint statement at the conclusion of the seventh meeting of the Pakistan-Iran Joint Working Group (JWG).

The two sides also agreed to develop a joint declaration, signifying the commitment of the governments to the project, for signing in a ministerial meeting in June in Tehran.

According to a written statement distributed at the press conference, the JWG examined financial, commercial, technical and legal aspects of the project. Major issues discussed included gas pricing, project structure, project feasibility, gas off-take volumes and the GSPA.

The next JWG meeting will be held here on May 25, while Petroleum Ministers from both countries will meet in Tehran in June.

Waqar said the construction cost for Pakistan is likely to be 2-2.5 billion dollars.

Pakistan President and Prime Minister have envisioned Pakistan becoming an energy corridor for China, he said.

He said it was also possible to lay two parallel pipelines to meet India and Pakistan's energy requirements "Things still have to be sorted out at bilateral level," he said.

Hosseinian, however, said Iran had reserved enough gas for the IPI (Iran-Pakistan-India) pipeline to meet both Pakistan and India's energy needs.