Pakistan and Iran have agreed to reignite efforts to jointly execute the Iran-Pakistan (IP) gas pipeline project. The two nations are set to commence formal negotiations in the coming weeks, marking a significant shift in the longstanding stagnation of the initiative.
Despite the positive turn, the Iranian deadline for potential international arbitration by September 2024 looms, allowing a limited time for both countries to explore bilateral solutions.
Energy Minister Muhammad Ali, expressing optimism, stated, “We have held constructive talks in Tehran, and Pakistan has renewed its commitment to the project.” The parties engaged in fruitful discussions where Pakistan emphasized its pressing energy needs, highlighting collaborative efforts to enhance the TAPI gas line project.
The Iranian side responded affirmatively, expressing readiness to intensify engagements, breathing new life into the IP project.
During the discussions, concerns regarding potential US sanctions on the IP gas pipeline were addressed. The Iranian delegation argued that, given their ongoing gas exports to Azerbaijan and Turkmenistan without facing sanctions, a similar scenario would apply to Pakistan.
This raised hopes that the project could proceed without the specter of US sanctions. The Inter-State Gas Systems of Pakistan and the National Iranian Gas Company had previously inked a revised agreement in September 2019, allowing Iran the option of international legal action after 2024 if significant delays occurred.
Energy Minister Muhammad Ali responded to queries about the project’s feasibility and the looming threat of $18 billion penalties, stating that both nations are committed to exploring viable avenues for implementation.
Despite the complexities surrounding the project, renewed diplomatic efforts indicate a shared determination to overcome hurdles and see the IP gas pipeline to fruition.
Beyond the gas pipeline project, the discussions expanded to encompass broader energy collaboration. Iran extended an offer to export additional electricity to Pakistan, specifically for the development of Gwadar and Chaman.
With an existing import of 104 MW of electricity from Iran, Pakistan considered the proposal, emphasizing the potential for increased energy cooperation. The evolving energy landscape, coupled with ambitious infrastructure projects like the China-Pakistan Economic Corridor (CPEC), may see Gwadar becoming a focal point for energy collaboration between Pakistan and Iran.