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Positive ramifications of Iran-Pakistan gas pipeline project


Recent political developments between Saudi Arabia and Iran, mediated by China, will strengthen cooperation between Asian countries especially in the field of conventional oil and gas energy projects, as well as renewable resources.

Recently, the issue of an Iranian-Pakistan gas pipeline was raised by a member of the Pakistani Parliament who stressed in his intervention the need to move forward with the implementation of this proposal. First discussed between the two countries several years ago, the issue has been raised again in the context of the new political and economic developments in the Asian region. Iran has the potential to export electricity to Pakistan as part of its efforts to boost trade and cooperation with its neighbours in a number of fields, including tourism and investment.

Prospects for the export of Iranian gas to both India and Pakistan were first raised several years ago based on attractive gas price agreement valid for a period of 25 years. This so-called ‘Peace Gas Pipeline’ would reach Pakistan through India.

But the proposals faced many challenges because of India's withdrawal from the venture and Pakistan's inaction, further compounded by US embargo and international sanctions against Iran.

All of these developments led to the freezing of the project, until recently, with both Russia and China saying they are ready to support and finance this vital project.

Iran for its part, has completed the laying of the pipeline on its territory, while also allocating a $500 million loan to Pakistan to complete its side of the project. Unfortunately, this has not been achieved to date.

Iran is also making efforts with India to secure its support for the ‘Peace Gas Pipeline’ by undertaking official visits for talks between the two countries. It is also working to revive support in Pakistan as well. The goal is to ensure the security of the project, but also agree on a gas price between the countries involved.

All of this comes at a time when the two countries face energy supply challenges amid international supply shortages, strong growth in energy demand from the transport sector and the steep increase in international oil prices. Against this backdrop, the two countries have an opportunity to benefit from Iranian gas in the future, in addition to opening up supply opportunities to other countries in their vicinity that also need energy.

The completion of this project will undoubtedly open new horizons for mutual cooperation between these countries and enhance investment opportunities among them. It will also help achieve trade and economic integration in Central Asia, Europe and the Middle East, alongside China and Russia.

In the recent past, Pakistan suffered a major flooding crisis that exacerbated its electricity supply challenges when power stations and grid infrastructure were inundated by the floods. Shortages of LNG only complicated the situation, forcing Pakistan to restrict power supply even as import costs of LNG began soaring.

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