Pakistan has suspended the completion of its multibillion dollar gas project with Iran, citing pressure due to US sanctions on Iran, Pakistan’s local newspaper Dawn reported.
The US sanction imposed on Iran over its nuclear programme disrupted the completion of the Iran-Pakistan pipeline, a now bilateral project formerly known as the India-Pakistan-Iran gas pipeline.
In written testimony to the National Assembly, Pakistan’s Minister of State for Petroleum, Musadik Masood Malik, said: “Pakistan has issued a Force Majeure and Excusing Event notice to Iran under the Gas Sales and Purchase Agreement (GSPA), which resultantly suspends Pakistan’s obligations under the GSPA.”
The project will be resumed once sanctions on Iran are removed and there is no threat to state-owned entities. “Given that, no date and deadline can be given for the completion of the Iran-Pakistan Gas Pipeline Project,” Malik added.
Malik recorded in a policy statement that Iran disputed the force majeure notice. The news comes after the Government of Pakistan was questioned about the project's completion date and if fines were due to be paid in case of any delays.
Only two days ago, Iran’s Foreign Minister, Hossein Amir-Abdollahian, visited Islamabad, Pakistan, where the two countries signed a bilateral trade deal worth more than $5bn over five years.
“We discussed the meetings between the official delegations of the two countries over political, economic, trade, tourism and border issues,” Amir-Abdollahian said. “We do believe that the completion of the Iran-Pakistan gas pipeline is definitely going to serve the national interests of our two countries,” he added.
The project was launched in 2013, with operations set to begin by the end of 2014 as Iran had invested around $2bn. However, the two countries were aware of the risks incurred with international sanctions regarding Tehran’s nuclear programme.
The US imposed sanctions on companies producing, selling and shipping Iranian Petrochemicals and Petroleum in February.
“The Government of Pakistan is engaged with the US authorities, through diplomatic channels, to seek exemption for the project,” Malik said in the letter. "All necessary actions are being taken to construct the gas pipeline at the earliest."
