Pakistan, Iran sign gas export deal.

ISLAMABAD: Pakistan and Iran today formally signed an agreement for a USD 7.5 billion gas pipeline project that will lead to the supply of 750 million cubic feet a day of gas in four years.

The pact was signed in Tehran by Iran's Deputy Oil Minister Javad Ouji and a Pakistani delegation that included Petroleum and Natural Resources Secretary Kamran Lashari and Inter-State Gas Company Managing Director Naeem Sharafat.

"Now the project has entered into the implementation phase and there are no further formalities left in the way," Sharafat said.

The project is testimony to the long historic and cordial relations between Pakistan and Iran, he said.

The pipeline will connect Iran's South Fars gas field with Pakistan's Balochistan and Sindh provinces.

Pakistan has to build about 700 km of pipeline from the border with Iran, traversing the Makran coastal highway to connect with its existing gas transmission network at Nawabshah.

Pakistan plans to build a 42-inch diameter pipeline at an estimated cost of USD 1.65 billion. Under a bilateral gas sale and purchase agreement, Pakistan will import 750 million cubic feet a day (mmcfd) of gas with a provision to increase this figure to one billion cubic feet a day (bcfd).

The gas to be imported from Iran will be about 20 per cent of Pakistan's current gas production. The agreement is valid for a period of 25 years and renewable for another five years.

The project is crucial for Pakistan, which is facing a crippling energy crisis. The country has been hit by a severe electricity shortage and the pipeline will help it generate 5,000 MW of electricity.

Iran has the world's second largest gas reserves after Russia but has struggled for years to develop its oil and gas resources.

Sanctions by the West, political turmoil and construction delays have slowed Iran's development as an exporter.

State-run television in Iran said the total length of the pipeline will be 1,000 km and about 907 km had already been built.

The project was conceived in the early 1990s as a tri-nation venture involving India.

However, the project could not take off for various reasons, including new gas discoveries in Pakistan, Indian concerns about the pipeline's security and Iran's indecisiveness on certain issues.

Under an agreement signed in March, Pakistan will be allowed to charge a transit fee if the pipeline is eventually extended to India.

Both Pakistan and Iran have said India can join the venture at a subsequent stage.

Source : expressbuzz