Islamabad, 7 March 2021 (GNP): According to Iran, it has already invested $2 billion to finish its section of the pipeline within its borders, while Pakistan has yet to commence the construction process.
Earlier, the Pakistan Muslim League-Nawaz (PML-N) government chose to suspend the LNG Gwadar Pipeline due to pressure from Saudi Arabia. Back then, Pakistan intended to construct the 80-kilometre pipeline that linked to Iran-Pakistan once the tension between the United States (US) and Iran settled down.
In 2017, Saudi Arabia engaged in a diplomatic dispute with Qatar and urged Sharif to halt the Iran-Pakistan gas pipeline as well as the LNG agreement with Qatar.
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Pakistan suspended solely the LNG Gwadar agreement, which was perceived as a component of the IP gas pipeline initiative, while it proceeded with the LNG contract with Qatar.
According to officials, Iran has no alternative but to take legal action in an international court. They have stated that if Iran chooses not to bring a case in the international court, it would have to retract its potential claims against Pakistan in the event that the project is not completed.
They also added that Iran would essentially be abandoning its $18 billion claims on the IP gas pipeline initiative if it abstains from pursuing legal action.
Although Iran has not formally informed Pakistan of its intention to take legal action, Pakistani authorities believe that Iran may initiate a legal dispute to protect its interests in the IP gas pipeline initiative.
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The Petroleum Secretary had recently notified the Public Accounts Committee (PAC) that Pakistan was at risk of facing demands amounting to $18 billion due to the lack of progress in commencing the construction of the IP project.
Sources indicate that the Prime Minister is seeking to leverage his influence to identify a solution that would prevent a legal dispute.
In the past, Pakistan and Iran maintained favorable ties, particularly during the Pakistan People’s Party (PPP) government. Under Asif Ali Zardari’s presidency, both nations signed a Gas Sales Purchase Agreement (GSPA), which obligated Pakistan to commence the construction of the IP project.
Officials and specialists now suggest that, given the present circumstances, Foreign Minister Bilawal Bhutto could play a crucial role in steering the countries away from a legal dispute.
Previously, Pakistan procured Iranian oil, which came to a halt in 2010 when Pakistani refineries were unable to fulfill their payments.
Although payment was not a significant issue between the two nations – they had developed currency swaps and barter trade agreements – specialists assert that the primary reason behind the rift was the United States’ reluctance to exhibit flexibility regarding oil and gas trade between Pakistan and Iran.
Following the inauguration of US President Joe Biden, Pakistan had anticipated obtaining an exemption from the US to initiate the project; nonetheless, this has not transpired.
