Updated: 10/31/2013 23:42 | By Agence France-Presse

Pakistan insists troubled Iran pipeline still possible

Pakistan insisted Thursday it was still keen to press ahead with a troubled pipeline to bring gas from Iran, despite comments by an Iranian minister that he had no hope for its completion.


Pakistan insists troubled Iran pipeline still possible

Welders work on a section of a pipeline which is decorated with the Iranian and Pakistani flags during a ceremony in Chah Bahar, on March 11, 2013

The $7.5-billion project, aimed at easing Pakistan's chronic gas and electricity shortages, has drawn threats of US sanctions and run into repeated problems.

The Iranian side is almost complete but Pakistan has struggled to find the money to pay for the 780-kilometre (485-mile) section to be built on its side of the border. 

Earlier this month Islamabad asked Tehran to stump up $2 billion to finish construction.

Iranian Oil Minister Bijan Zanganeh said Wednesday there was no hope of exporting gas to Pakistan because the financing was not there.

But his Pakistani counterpart insisted the project would be completed.

"There is absolutely no chance to abandon the pipeline project, because we need it," Minister for Petroleum and Natural Resources, Shahid Khaqan Abbasi, said on Geo TV news channel.

A foreign ministry spokesman said Pakistan was "committed to all options" to tackle energy shortages, which cause long blackouts in the summer and problems with gas supply in the winter.

Iran currently produces around 600 million cubic metres (21.2 billion cubic feet) of gas per day, almost all of which is consumed domestically. Its only foreign client is Turkey, which buys about 30 million cubic metres per day.

With the economy and government finances in a poor state, if Iran will not pay to complete the pipeline it is unclear where Pakistan could find the money it needs.

Investors and other governments are reluctant to get involved in the project because of the threat of breaching international sanctions on Iran.

Last week the Sustainable Development Policy Institute, an Islamabad think-tank, warned that under the current terms of the deal Pakistan would pay an exorbitant price for Iranian gas.

Arshad Abbasi, an energy specialist at the institute, voiced surprise at the Iranian minister's comments and said he thought it was likely a bargaining gambit as Tehran seeks to stop Pakistan negotiating a lower price.

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