Iran, Pakistan ink $7.5 billion gas pipeline deal

Published: 18-Mar-2010

Pakistan and Iran have signed an agreement for the construction of the $7.5 billion natural gas pipeline, also referred as "peace pipeline".

The deal was signed between the two countries in Turkey between Inter-State Gas Systems, a semi-autonomous Pakistani company, and the National Iranian Oil Company. The pipeline will connect Iran's South Pars gas field with Pakistan's Balochistan and Sindh provinces, which borders India. Each country will be responsible for building the section of pipeline that runs through its own territory.

India was a part of the project initially, but due to certain geo-political issues the project has now become a bilateral affair between Iran and Pakistan. However, the option of India joining the pipeline at some stage was kept open by Pakistan and Iran. Pakistan has retained the right to charge transit fee for gas transported to India, if it decides to join later.

The $7.6 billion project is expected to ease energy shortages in Pakistan. Pakistan produces just 80% of its overall electricity needs.

Naveed Qamar, federal minister for petroleum and natural resources of Pakistan said that work will soon start on the pipeline to complete it on schedule. The Iran-Pakistan pipeline is scheduled to be operational by 2015.

Tell your friend about this article