Iran-Pakistan pipeline: way forward
THE adviser to the prime minister on petroleum and natural resources, Dr Asim Hussain, has recently informed the Senate that the total demand for natural gas is eight billion cubic feet a day (bcfd), while the supply was four bcfd, which created a huge gas shortage this winter.
Some people argue that Pakistan is rich in petroleum resources and should extract gas from its own soil instead of looking for alternative means to overcome gas shortage. It should, however, be noted that current and previous governments have issued dozens of exploration licences to national and foreign companies. However, no major oil or gas discovery has been made for over a decade to meet the ever -increasing demand.
After many years of delays on the Iran-Pakistan gas pipeline project, the government has finally signed the agreement with Iranian government. Under the deal between the national Iranian oil company and Pakistan’s interstate gas system, Tehran will provide 750 million cubic feet a day of natural gas for 25 years from its giant offshore South Pars field in the Persian Gulf.
The total cost of laying down the Pakistani section of the pipeline is $1.5 billion. Iran has already completed the construction of its section and is funding $500 million for the construction of Pakistani section, with the Pakistan government furnishing the remaining $1 billion.
Pakistan spends circa $12 to 13 billion annually on oil imports, mainly on furnace oil which is used to produce the most expensive electricity. The import of Iranian gas will not only help in overcoming gas shortage, it will reduce the electricity generation cost as well.
The plan is to complete the construction of 781km of Pakistani section of the pipeline in 15 months, which means that gas will be available from December 2014.The US has pressed the Pakistan government for Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. However, the prospects of this project are gloomy due to the prevailing law and order situation in Afghanistan, particularly after the withdrawal of Nato forces next year.
Furthermore, it will take many years to construct the TAPI pipeline after all four countries agree on the terms to materialise the project.
Early completion of the Iran-Pakistan gas pipeline project, in view of the energy crisis in the country, has become essential to reduce the gas and electricity crisis. In the absence of any other mega project under construction, we cannot afford to delay the project any longer.