Iran is Preparing to Sue Paks Over Unbuilt Pipeline

October 25, 2024

Tehran has given its final notice to Islamabad that it will take Pakistan to the Paris Arbitration Court for not constructing its side of a gas pipeline linking the two countries, senior officials told The News of Pakistan August 27. In 2009, the two countries signed a Gas Sales Purchase Agreement (GSPA) to build and complete a pipeline by 2014 from the Persian Gulf all the way across Iran and Pakistan.

The deadline was eventually extended to March 2024 to complete the 2,775-kilometer pipeline, which would carry Iranian natural gas exports to Pakistan of 750 million cubic feet per day. Tehran says it has completed the pipeline on its territory at a cost of $2 billion, but Islamabad has only built a token section, partly because Washington says the pipeline would trigger US sanctions.

But there are other issues. For one thing, it is unlikely that anyone will lend Pakistan the more than $7 billion needed to build the pipeline. For another, the project was designed with India being at the end of the pipeline and buying gas from it, but India long ago backed out because it didn’t like Iran’s contract terms.

Finally, Iran has used the pipeline it built across southern Iran to supply gas to homes and businesses all across the south and it isn’t clear Iran could provide much gas to Pakistan unless it cut off its customers inside Iran. Last spring Iran gave Pakistan six months to finish the pipeline by September.

With no work done, Iran served its final notice to take Pakistan to a Paris arbitration court. The penalties for Pakistan’s failure to complete the pipeline could amount to as much as $18 billion, Pakistan news outlets have been saying for months.