March 15, 2024
The Pakistani government has announced it will build a small section of the pipeline it long planned for importing Iranian natural gas. It is doing so, however, not to import gas but to avoid having to pay an $18 billion penalty for not building the pipeline. The Pakistani government announced February 24 that it will spend $158 million to build an 81-kilometer (50-mile) segment from the Iranian border to the port of Gwadar. However, it said nothing about building the planned 700 additional kilometers (435 miles) of pipeline from Gwadar to populated parts of Pakistan where the gas is meant to be consumed.
Iran says it has built a pipeline from the Persian Gulf to the Pakistani border to carry gas to Pakistan. Actually, the pipeline doesn’t quite make it to Pakistan. Pakistani news reports say it is about 250 kilometers short of reaching Pakistan. In addition, the pipeline is now used to supply gas to communities all across southern Iran. It isn’t known how much spare space there is in the pipeline to carry gas to Pakistan.
The project was launched two decades ago with the idea that Iran would sell gas to both Pakistan and India. India was interested, but Iran demanded that India pay for the gas when it left Iran and entered Pakistan. In other words, if there was a war and Pakistan took the gas for itself, India would still be required to pay. When Iran refused to drop that condition, India backed out of the project.
Given the global lack of trust in the Islamic Republic, Pakistan could never raise the estimated $7.5 billion needed to build the full pipeline across Pakistan along with pumping stations and connecting lines, so the project just died. But the outstanding contract gave Pakistan a December 2024 deadline for taking gas at the border or it would face a penalty, which the Paks now say totals $18 billion. So, it figures by building a pipeline to the border it can avoid the penalty even though that short pipeline could not take the gas contracted for.
Pakistan went through the same gamesmanship in March 2013, when it avoided a penalty by calling out the TV cameras and having a big ceremony to inaugurate construction of the pipeline. Iranian President Mahmud Ahmadi-nejad and Pakistani President Asif Ali Zardari attended and were all smiles. The short length of pipe still sits at the border unused. Iran has not so far carped that Pakistan will only be building a small section of the needed pipeline. Nor has it said how much gas it could supply if it didn’t cut off any of the current customers taking gas in Iran from the pipeline.
