7/28/2019 Pakistan Iran Gas

1/2

IRAN PAKISTAN GAS PIPE LINE, CAPACITY, POSSIBLE HURDLES

POSSIBLE SANCTIONS

PresidentAsif Ali Zardariled a 300-member delegation from Islamabad to Iran,where officials from both countries attended a ceremony inaugurating the project.

The 1,244-mile pipeline would each day transport more than 750 million cubic feetof natural gas to Pakistan from Iran's South Pars gas field in the Persian Gulf.

Pakistan produces only 30% of the natural gas it needs, while Iran has the world'ssecond-largest natural gas reserves. Many of Pakistan's factories and its transportsystem rely heavily on natural gas -- about 21% of the country's vehicles run oncompressed natural gas.

Pakistan has high stakes in the pipeline bringing gas from Iran. There are however serious

hurdles in the way of its becoming functional, the most important being a stiff opposition

from the US. Similar opposition is expected from the Saudi government, whose prerogative

remains containing Iran. The U.S. has repeatedly warned Islamabad that forging aheadwith the pipeline project could expose Pakistan to economic penalties under the IranSanctions Act.

The internal threats to the pipeline emanate from the Baloch separatist organizations and

from anti-Shia, anti-Iran militant networks. The militant groups can be used as proxies by the

outside forces to bomb and disrupt the pipeline.

Power shortages have badly impaired the countrys economy by slowing down industrial

production, weakening the countrys agricultural capacity and having a damaging impact on

business in general. Thousands of workers have been rendered unemployed while the incomeof those working as daily wage earners have been reduced. The growing dependence on

costly furnace oil for the production of thermal power continues to raise electricity charges.

The pipeline is vital for Pakistan. It would help shift the domestic gas production that

currently hovers around 4.2 billion cubic feet per day to the industrial sector. The measure

would enhance industrial output, bring laid off workers back to the factories and create more

jobs.

The gas that the country would be importing from Iran would allow the generation ofadditional 4,123 megawatts of electricity at cheaper rate. It will also restore the 2,232

megawatts of idle thermal power generation capacity with the diversion of about 406 mmcfd,

leaving 344 mmcfd for other uses such as manufacturing fertilizer and supplying gas to

domestic consumers. While Pakistan would pay Iran $3 billion a year, it would reduce its oil

imports by $5.3 billion, resulting in a net annual reduction in energy imports by about $2.3

billion.

http://www.latimes.com/topic/politics/asif-ali-zardari-PEPLT007501.topichttp://www.latimes.com/topic/politics/asif-ali-zardari-PEPLT007501.topichttp://www.latimes.com/topic/politics/asif-ali-zardari-PEPLT007501.topichttp://www.latimes.com/topic/politics/asif-ali-zardari-PEPLT007501.topic

7/28/2019 Pakistan Iran Gas

2/2

The pipeline however constitutes a threat to US strategic aims. The US plans involve

strangulation of the Iranian economy through sanctions to force Tehran to abide by the US

diktat. On top of that, Iran has announced plans to build a 4,000 barrel-a-day oil refinery at

Gwadar that would further undercut U.S. sanctions and eventually ensure energy supplies

going to China, even if the Gulf's strategic Strait of Hormuz is closed.

The threat of the US sanctions has stopped a number of countries from financing the

pipeline. If Iranian gas begins to arrive in Pakistan, it would be another proof that, despite

being a super power, the US is gradually losing hold over the world.

While brandishing the threat of sanctions against Pakistan, the US is cautiously weighing

their possible effects. Pakistans territory provides the cheapest exit to the US forces

withdrawing from Afghanistan. Pakistans help is required to restore peace in post -

occupation Afghanistan. The consequences of a further ratcheting up of the anti-US

sentiment in the nuclear armed Pakistan cannot either be easily ignored.

Even if the US was not to urgently impose sanctions on Pakistan, it is likely to use Saudi

Arabia and Qatar to pressurize Pakistan to abandon the pursuit of the Iranian gas.

U.S. officials have tried to convince leaders in Islamabad that Washington can help solve

Pakistan's energy crisis through the construction of hydroelectric dams and other projects

that beef up the country's power grid.

Looming as a bigger hurdle for Pakistan is its ability to finance its segment of the project,

which is expected to cost as much as $1.5 billion. Iran has agreed to provide a $500-million

loan to help pay for the work, but it remains unclear whether Pakistan can succeed in raisingthe additional $1 billion through surcharges tacked on to electricity bills. Many Pakistani

power consumers don't pay their bills, and utility companies have struggled to find ways to

clamp down on delinquent customers.