Explained | The Iran-Pakistan gas pipeline: History, controversy and impediments

The ambitious Iran-Pakistan gas pipeline has been shelved. The project has thepotential to change the energy and perhaps the political landscape of the region but it has now been shelved, apparently under US pressure. India was part of the project initially but it withdrew more than a decade ago, citing security and gas pricing concerns.

The shelving of the pipeline has come just when Pakistan is struggling to put its cash-strapped economy back on track.

The initial years

Add WION as a Preferred Source

Discussions over the pipeline between Iran and Pakistan began in the year 1995. Both countries signed an agreement in 1995. It was initially decided that a pipeline would be constructed from the South Pars gas field to Karachi. It was later proposed by Iran that the pipeline should be extended to India. An initial agreement was signed between Iran and India in 1999.

The geopolitical element

Initially, India was keen on the pipeline as it was seen as an effective way to attain energy security. But doubts within Indian circles remained as the pipeline was going to pass through Pakistan and depending upon a regional foe for energy security was considered a move too risky. That Iran almost always finds itself at odds with the US was also a big concern.

In the initial years, the gas pipeline from Iran was also seen as something that cancounter China's plans with respect to Gwadar and Afghanistan. But in those years, the US-led coalition was firmly in charge of affairs in Afghanistan.

Another element was that of regional geopolitical rivalry between Saudi Arabia and Iran. Though there has been a thaw in relations between Iran and Saudi Arabia now, in the 2000 and 2010s the rivalry had sprouted many issues in the region.

Watch | Cash-strapped Pakistan abandons Iran gas pipeline project; US pressure over sanctions | Details

The Iran-Pakistan gas pipeline was perceived in Saudi Arabian circles as an event that would bring Iran and Pakistan closer.

It has been reported that Saudi Arabia tried to pressure Pakistan to abandon the gas pipeline in 2012 and offered oil supplies and also an oil facility and an oil terminal.

In 2011, Iran announced that it had finished construction of a portion of the pipeline on its side and that it awaited completion on the Pakistani side. Iran had said that if Pakistan did not complete construction on its side by the year 2014, it will have to pay a penalty. The penalty was reportedly as huge as USD 1 million per day.

The pipeline was also beset with other problems. In 2012, the Pakistani finance ministry said that there was not much enthusiasm among private investors for the pipeline project. The ministry even mulled imposing a tax on consumers to remedy this.

The project faced opposition from the US almost all the time. The US, which has historically been the benefactor of Pakistan and poured billions of dollars over the years, was reportedly not happy with the prospect that Pakistan would join hands with Iran, the geopolitical foe of the US.

Pakistan did try to weather the pressure. In 2012, Pakistan's Foreign Minister Hina Rabbani Khar said that Pakistan will not buckle under the pressure the US exerted. She said that the Iran-Pakistan gas pipeline project was in the national interest of Pakistan and that it will be completed 'at any cost'.

The completion of the project involved another headache for Pakistan. Part of the pipeline passed through the restive Balochistan province.

Balochistan province has seen insurgency for a long time and the region also has elements that want to see it independent of Pakistan. The insurgents have in the past attacked Pakistani forces and even installations.

China is involved in the development of Gwadar Port in Pakistan. Gwadar is in Balochistan province. The port is being developed by China as a part of its China-Pakistan Economic Corridor (CPEC) project. There have been attacks on Chinese nationals involved in CPEC as well.

Also Read | Pakistan temporarily halts multi-billion dollar gas pipeline project with Iran amid US pressure: Report

Another international developmentthat has been an impediment to the gas pipeline is the US-Iran equation. The relations between the two countries had thawed after the Iran nuclear deal struck in the year 2015. The deal unravelled when then-US President Donald Trump took the US out of it and re-introduced sanctions on the Islamic Republic.

The re-introduced sanctions proved to be detrimental as they werea deterrent to Pakistan when it came to the construction of the pipeline.

Dawn, a Pakistani news outlet, has reported that Pakistan expressed an inability to pursue the project as long as US sanctions on Iran remain or Washington tacitly green-lights Islamabad to go ahead with the project. The project has been stalled in spite of an acute energy shortage in the South Asian nation of 240 million people.

Pakistan has issued a Force Majeure and Excusing Event notice to Iran under the Gas Sales and Purchase Agreement (GSPA), which resultantly suspends Pakistan’s obligations under the GSPA, according to a written testimony Minister of State for Petroleum Musadik Malik has given to the National Assembly.

(With inputs from agencies)

You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

WATCH WION LIVE HERE