Iran and Pakistan are once again eyeing a revival of a long-dormant gas pipeline project that has faced setbacks for over a decade. Known as the Iran-Pakistan gas pipeline, or IP Gas, this ambitious initiative has been mired in challenges stemming from geopolitical tensions, economic considerations, and international sanctions.
Initially conceived to transport natural gas from Iran to Pakistan, the project’s progress has been sluggish since its inception. In March 2013, Presidents Zardari and Ahmadinejad ceremonially inaugurated the project near Iran’s Chabahar port, signalling the commencement of the USD 7.5 billion venture. However, progress stalled due to US sanctions on Iran, despite Iran completing its part of the pipeline.
Negotiations must conclude by March 2024 to avoid legal ramifications, with Islamabad having until September 2024 to meet its obligations. Both nations are exploring avenues to complete the pipeline while circumventing US sanctions, underscoring the project’s significance for their respective national interests.
Pakistan has pursued various legal and diplomatic avenues to avoid penalties and has sought a waiver from the US regarding the project. The completion of the pipeline is deemed crucial for Pakistan’s energy security and to address its burgeoning energy needs, fostering economic and commercial ties between the two countries.
Despite facing resistance from Western partners, Pakistan has made strides in advancing the pipeline project. The initial phase, spanning 80 kilometres from Gwadar to the Iranian border, has received governmental approval and funding. However, securing financing remains a formidable obstacle, with speculation rife that China and Russia may provide funding for the Pakistani segment of the pipeline.
Numerous challenges beset the Iran-Pakistan gas pipeline project, including US sanctions, financial constraints, geopolitical conflicts, and operational delays. Overcoming these hurdles necessitates strategic planning and concerted collaboration between the two nations.
Projected expenses of USD 7.5 billion have contributed to delays in securing adequate financing. Moreover, regional dynamics exert influence on progress and decision-making, with geopolitical conflicts adding another layer of complexity.
Iran grapples with domestic natural gas shortages, which have ramifications for its energy exports and oil production. Despite facing scarcity and mounting local demand, Iran continues to rely on gas exports, posing economic challenges and jeopardising internal energy security.
The depletion of gas output poses a threat to Iran’s oil production, exacerbated by low investments and technological constraints. Iran’s ability to sustain oil production is imperilled by its gas shortage, as the country must inject approximately 300 million cubic meters of gas per day into its ageing oil reservoirs to maintain production levels.
The expansion of QatarEnergy’s liquefied natural gas (LNG) production underscores the competitive landscape in the global energy market. Iran’s ability to address its energy shortages and navigate international sanctions will determine the fate of the Iran-Pakistan gas pipeline project.
Efforts to address challenges persist, but uncertainties loom over the project’s viability until Iran’s energy situation improves and sanctions are lifted. The feasibility of the Iran-Pakistan gas pipeline hinges on Iran’s ability to tackle domestic natural gas shortages and the lifting of international sanctions.
In conclusion, while completing the pipeline holds the promise of meeting Pakistan’s energy needs and bolstering bilateral ties, its future remains uncertain pending resolution of Iran’s energy challenges and the removal of sanctions. Despite ongoing efforts, numerous barriers persist, underscoring the intricate nature of energy projects in the geopolitical landscape.
Iran’s predicament highlights the delicate balance between meeting export demands and addressing internal energy needs amidst gas scarcity. The economic repercussions of Iran’s gas shortage extend beyond business implications, threatening the nation’s internal energy security. Resolving Iran’s energy crisis demands substantial financial investments, scientific advancements, and efficient energy management practices. The future of the Iran-Pakistan gas pipeline project remains contingent on Iran’s ability to navigate its energy challenges and the lifting of international sanctions.
Image Credit: Martin Adams on Unplash
