Iran-Pakistan Gas Pipeline (IPP) News & Updates.

[idea123]

Good News.
I thought pakistan is self sufficient in gas as it has highest per capita consumption of gas in Indian subcontinent.

 

[RiazHaq]

The current completion date for Iran-Pakistan gas pipeline project is June, 2014, if things go smoothly. There is significant investor interest. Russia's Gazprom is very keen on the project. "We are ready to join the project as soon as we receive an offer," Russia's deputy energy minister Anatoly Yankovsky has been quoted as saying by the media. Another top Russian government official has said Moscow sees the pipeline as a means to divert Iranian gas from competing with Russian exports on the European market.

Iranian Consul General in Pakistan, Masoud Mohammad Zamani has told Pakistani news site the Dawn that Iran has completed major portion of work on Iran-Pakistan gas pipeline project and within couple of months the pipeline will at Iran-Pakistan border. Hopefully, by 2013 Iran gas will be used in Pakistan, Iranian envoy explained during a meeting with members of Karachi Chamber of Commerce and Industry.

India, too, needs to import gas to meet its growing energy needs. But it pulled out of the pipeline project after the US-India nuclear deal. If and when India does come back to the table, the pipeline built from Iran to Nawabshah in Pakistan can be extended to support additional capacity for India.

Haq's Musings: Pakistan's Twin Energy Shortages of Gas and Electricity

 

[SSGPA1]

This is good news but please keep in mind that delays are part of such mega projects and specially with political conditions in Pakistan, this project may be delayed by a year or more.

GoP has signed the paperwork but where is the infrastructure? I don't think 3 yrs will be enough to build infrastructure.

We also need cantts to protect the pipeline from insurgents etc and GoP has recently ordered to stop on going work on cantts.

 

[illuminatus]

Accord on Pak-Iran gas pipeline in few weeks: Naveed Qamar

Updated at: 1945 PST, Thursday, January 21, 2010
ISLAMABAD: Federal Minister for Oil and Gas Naveed Qamar has said that the agreement on Pak-Iran gas pipeline project will be finalized in the next few weeks.

He was talking to media in Islamabad on Thursday.

The Minister told the reporters that that a summary for import of Liquefied Natural Gas (LNG) will be presented at the upcoming meeting of Economic Coordination Committee (ECC).

The price of LNG is being kept at par with crude oil and its import will begin from 2011.

Source: Accord on Pak-Iran gas pipeline in few weeks: Naveed Qamar

 

[pkd]

Pak-Iran gas pipeline pact to be signed on March 8: Qamar

SANGHAR: Federal Minister for Petroleum and Minerals Syed Naveed Qamar Sunday said the completion of Pak-Iran gas pipeline project will help overcome the country’s gas crisis.

Speaking to media persons after the inauguration ceremony of a gas processing plant in Sanjar Junejo village here, he said all the matters relating to Pak-Iran gas pipeline project have been finalized and that all is set to sign the project on March 8.

He said 12.5 per cent royalty of Pakistan’s oil and gas is going to the provinces, which, he said, have been directed to spend this amount on the uplift projects of the areas.

 

[AZADPAKISTAN2009]

Iran is on fast track to complete their side of the pipeline, pakistan needs to move fast and finish the lines so it can establish and fix growing demands of nation's energy needs

 

[pkd]

Pakistan Stresses Resolve to Continue Gas Pipeline Project



TEHRAN (FNA)- Pakistani Foreign Minister Shah Mehmood Qureshi underlined his country's rigid determination to continue the project for importing gas supplies from Iran irrespective of the US pressures.
"Despite the US conditions for Iran-Pakistan gas pipeline, we will continue this great project," Qureshi said in an exclusive interview with FNA in Islamabad on Sunday.

Pointing to the ineffectiveness of the ongoing pressures by Washington to hinder the project, the minister stated, "Pakistan is currently facing an energy crisis and Iran-Pakistani gas project, thus, serves Pakistan's interests."

Earlier, India rejected a call from the US to walk away from the pipeline project carrying natural gas from Iran through Pakistan, saying "energy security" is a priority for its rapidly growing economy.

The Indian external affairs ministry stressed that energy security was of prime concern to the country and the Iran-Pakistan-India pipeline was an important part of its plans.

The US is currently pursuing additional sanctions against Iran in the UN Security Council.

The 2700-kilometer long pipeline was to supply gas for Pakistan and India which are suffering a lack of energy sources, but India has evaded talks. Last year Iran and Pakistan declared they would finalize the agreement bilaterally if India continued to be absent in meetings.

In a major breakthrough on March 20, 2009, the Pakistani government approved Iran's proposed pricing formula for gas supplies to the South Asian nation.

According to the project proposal, the pipeline will begin from Iran's Assalouyeh Energy Zone in the south and stretch over 1,100 km through Iran. In Pakistan, it will pass through Baluchistan and Sindh but officials now say the route may be changed if China agrees to the project.

The gas will be supplied from the South Pars field. The initial capacity of the pipeline will be 22 billion cubic meters of natural gas per annum, which is expected to be later raised to 55 billion cubic meters. It is expected to cost $7.4 billion.

Fars News Agency :: Pakistan Stresses Resolve to Continue Gas Pipeline Project

 

[ameer219]

Looks like USA now should start getting it in their head that Pakistan's interests come first!

 

[Abdussamad]

I'll believe it when I see it! AFAIK they've been talking about this pipeline since the mid 90s . Its an excellent example of how mind numbingly slow governments can be.

 

[graphican]

This government is one of the best examples of how bad a democracy can actually be. The same government publicly vowed halt the drone strikes but privately they have been supporting them and rather encouraging them to keep the game on. PPP government is too weak to stand before Americans as they are volatile within their own country and like Musharaf, they need strong backing of every international support that could keep their government intact, for few more months if possible. With this aspect in view, no matter what our incompetent foreign minister says, actions are actually going to reflect what Americans are saying.

In the past few months the rigid stance about Afghanistan had come from the Army and not the political government and no wonder all the strategics dialog have been directly taking place between PA and US-Army while government's involvement has only be ceremonial. The current matter of Iran-Pakistan and possibily Iran-Pakistan-China gas pipeline has more of social and commercial value and is more in the hands of civil government. For that reason, it is likely that Shah Mehmood Qureshi would keep saying what public in Pakistan wants to listen but alongside, keep doing what Americans want this clan to do. The only thing which this Government needs to do is "delay" the development and keep en-cashing this delay in the form of American Aid that looters need to stuff their accounts more.

 

[bc040400065]

Pakistan, Iran sign gas pipeline accord

By Kalbe Ali
Saturday, 29 May, 2010

ISLAMABAD: Pakistan and Iran signed on Friday an agreement for supply of gas from Iran through the $7.5 billion pipeline project to be completed by the end of 2014. The cost for the Pakistan section of the project is estimated at $1.65 billion.
The ‘sovereign guarantee’ agreement was signed by S.R. Kasaezadeh, Managing Director of the National Iranian Oil Company, and Irshad Kaleemi, Joint Secretary of the Ministry of Petroleum and Natural Resources. Petroleum Minister Naveed Qamar and Secretary Kamran Lashari attended the signing ceremony.

Under the gas sale and purchase agreement (GSPA), Pakistan will import 750 million cubic feet a day (mmcfd) with a provision to increase it to one billion cubic feet a day (bcfd).
The volume of imported gas will be about 20 per cent of Pakistan’s current gas production and the agreement is for a period of 25 years, renewable for another five years. The gas will be provided to the power sector to generate about 5,000 megawatts of electricity.

As a part of the conditions precedent (CPs) to be completed by the parties to make the agreement effective, the government of Pakistan is providing a ‘performance guarantee’ on behalf of the InterState Gas Company.

Since all other CPs of the agreement have been completed, the project is ready to enter the implementation phase.

The petroleum minister said that construction of the pipeline would create jobs, provide vocational training and develop backward areas of Balochistan and Sindh.

“The IP project will be another testimony of the long historic and cordial relations between Pakistan and Iran,” Mr Qamar said.

http://www.dawn.com/wps/wcm/connect...e/pakistan,-iran-sign-gas-pipeline-accord-950

 

[Contrarian]

Iran pipeline will be Pakistan's Enron
S A Aiyar, 06 June 2010, 12:27 AM IST

Swaminomics declared last week that India must forget the proposed Iran-Pakistan-India gas pipeline because of the outrageously high cost of Iranian gas. Some readers have asked, “Why is Pakistan willing to pay the Iranian price, and go ahead with the project minus India?”

Answer: The pipeline is going to become Pakistan’s Enron. It will drive Pakistan towards bankruptcy and be aborted, just as Enron drove the Maharashtra government towards bankruptcy and was aborted.

Iran and other Gulf producers have long linked the price of gas to that of oil. This was acceptable for decades when oil prices, and hence linked gas prices, were subdued. But oil shot up from $14/barrel in 1995 to a peak of $150/barrel in 2008, and it is still around $75/barrel today.

Iran and Pakistan have agreed on a gas price linked to 80% of the Brent crude oil price. This would have been fair in 1995 but not any longer as oil is up from $14/barrel to $75/barrel.

In a recent interview with Newsline magazine, former Pakistan petroleum secretary Gulfraz Ahmed declared bluntly, “I am now appalled to know that the present negotiations are in the region of 80% of Brent crude.” He adds, “We need this gas urgently, but on the other hand, not at this price.”

He recalls that his original negotiation in the 1990s was for a gas price of $2.05/mmbtu (million metric British thermal unit) from Iran. But the new gas deal implies a price of $8/mmbtu if oil is $60/barrel. If oil goes up to $100/barrel — very likely in the next year or so — the gas price will soar to $13/mmbtu. And if oil returns to its 2008 level of $150/barrel — entirely possible when the Iran-Pakistan pipeline is completed in 2015 — gas will cost a mind-boggling $20/mmbtu, or 10 times as high as originally negotiated in the 1990s.

The cost of 5,000 MW of power to be generated from the gas will rise correspondingly. If oil costs $100/barrel, the linked gas price will translate into an electricity price of around Rs 7.50/ unit. Remember that Enron had to be closed when its price rose to just Rs 4.25/unit: the Maharashtra government said this would empty its coffers.
When Pakistan begins generating power with Iran gas in 2015, oil could be as high as $150/barrel. If so, the corresponding cost of electricity will be Rs 11/unit. Producing power at that price will be economic suicide.
Why has Pakistan got itself into such a trap? Well, don’t be surprised: many Indians still want to join this project. Politicians and strategy wonks can be so fascinated by projects with political appeal that they forget commercial sense. The Left Front is dying to join the project just to spite the US. Pakistan too has foreign policy wonks who see the pipeline as a way to kick the US and display solidarity with Islamic neighbours, oblivious of the suicidal cost.

When Enron proposed its 2000 MW plant in India, this was seen as a fabulously strategic project, worth paying a premium for. At the time the state electricity boards were bust, and India had a terrible power shortage. In this energy desperation, the Enron project was grasped eagerly and cleared at record speed, notwithstanding warnings about the cost. Many hoped this strategic deal would open the gate for dozens more foreign investments.
Fifteen years later, Pakistan also has a terrible power shortage. It too suffers from energy desperation, and so is eagerly grasping a massive power project based on Iranian fuel, ignoring warnings from its own experts about the cost.

Gulfraz Ahmed mentions a third reason for Pakistan’s behaviour: lack of negotiating skills to understand the risks of a 40-year deal with an unfavourable pricing formula. This happened in Enron’s case as well. In both cases the negotiators failed to realize the risks of a contract linked to world oil prices (which could shoot up) and denominated in dollars (the electricity price shot up every time the rupee declined).

Critics of Enron shouted “corruption”. More than 20 cases were filed against the project but all were dismissed by the courts — there was no hard evidence. However, many Indians remained convinced that money had changed hands because Indian politicians are so obviously corrupt. I predict that the Iran gas deal will also be widely condemned as corrupt in Pakistan once the high cost of electricity becomes patently obvious.

Corruption charges are a distraction. The Enron fiasco was caused by a combination of energy desperation, incompetent negotiation, and fanciful notions of strategic importance. Pakistan faces a similar fiasco for the same three reasons.
Iran pipeline will be Pakistan's Enron : World : S A Aiyar : TOI Blogs

 

[ajpirzada]

interesting article.....

wat will happen when the oil prices will rise to 150?? something to think about. if we go for gas which we are gettin at 15% less than oil, we are still saving money by not using oil. arent we?

 

[Marxist]

According to I-P gas pipe deal Pakistan will get Gas at the rate of 78 per cent of the crude oil price,I think author missed that point

in 2015, oil could be as high as $150/barrel. If so, the corresponding cost of electricity will be Rs 11/unit

so an unit will cost around 8.58 not 11/unit.

and if India joins this Pakistan can further reduce this price.

 

[sulemani keeda]

Pakistan too has foreign policy wonks who see the pipeline as a way to kick the US and display solidarity with Islamic neighbours, oblivious of the suicidal cost.

very corect.