US curbs feared: Pakistan to tell Iran IP project not implementable

[livingdead]

Can anybody tell how much iran has spent on this pipeline on their side?

 

[rmi5]

As far as I know its not because Pakistan can't provide financing for it; yes its going to be difficult....very difficult as most of our funds are tied up in either some other projects or they are tied up in the War On Terror where not only the fighting costs but the rehabilitation costs even more - We've currently got the largest Internally Displaced Population in the world !

Additionally last years or the year before that's floods had ravaged most of Pakistan & we're still reeling from its affects - Millions were affected !

So whereas the funding is going to be supremely difficult it isn't going to be impossible; however the looming US Sanctions which may even take the form of UN Sanctions are a cause for great concern to us !

Pakistan has always maintained that because the Pak-Iran Pipeline Contract was signed before the US Sanctions on Iran - it doesn't fall under its jurisdiction & the project cannot be sanctioned; the Americans categorically tell us something else !

Unfortunately our present economic situation does not allow for us to risk 'sanctions' - We don't export Oil....we export Textile & Agricultural Products with the US being our largest trading partner !

That dependency, which shouldn't have been there, is there but in our present situation either we stand up & say 'foOk it...we'll still built the pipe-line' & in the process be sanctioned which will not only lead to our financial transactions & exports where the US is involved in any-way (and it is involved in almost every way imaginable) being curbed which would lead to eventual bankruptcy but would also lead to our inability to pay for our gas imports from Iran because we wouldn't have any dollar to it !

Furthermore with the advent of the off-shore shale gas drilling & exploration becoming increasingly common the world gas prices are going down whereas as per the Iranian-Pakistani contract they're pegged with Oil - This is increasingly being viewed as an inadequate formula of gas price calculations with, from what I've heard, oil & gas contracts all over the world being talked about being renegotiated as some are right now therefore even from a pricing point of view there is an issue !

But be that as it may even with the current prices we save on a lot of foreign exchange reserve being spent if we can import from Iran instead of importing Furnace Oil via Tankers to fuel our industries & so the Iran-Pakistan Gas Pipe-line is very important for us to be built because it is beneficial for us but with the looming US Sanctions going for this IP Pipeline would be like trying to solve a gas shortage issue in your house where you not only get gas but you get it cheaper by doing a deal which propels the power to be (in this just for the purpose of the analogy a Union Council or the Local Government) to impose such a hefty fine on you that not only rolls back any & all benefit accrued from your 'solution to the gas problem' but also ends up eating enough out of your own personal income that you're at a significant Net Loss & all of this, by the way, happens when you're literally hand-to-mouth which is to say you're nearly broke - thats how bad your financial situation is !

What would you do then ?

Pakistan was banking on the recent US-Iran Thaw in relations to help curb these sanctions but increasingly it is appearing to be little more than a red-herring that provided both Iran & the US a breathing space for a few months but it isn't going to affect any of the sanction related problems on the ground - the IP is still going to be sanctioned if we go through with this !

So try to look at it from our point of view as well !

@rmi5 @haman10 !

I understand your points and concerns. I think the best option for you is trying to use your excellent relations with china and bring them on the deal. In this case, you would need to spend less for building the pipeline and you would enjoy the transfer gas income. Iran has a 20 years exporting gas deal with China, so we can assume that you should not be worried about an extra agreement between Iran and China. BTW, why don't you try to buy electricity from Iran by a UHV line? Iran has a lot of idle electricity capacity, and building such a line would need less time and money.

 

[Esfand]

Iran has a lot of idle electricity capacity

Really?! I did not know that

 

[haman10]

@haman10 and @rmi5 i was in particular keen to explore the oppurtunities for Indian private sector I myself have friends in essar oil(a big indian oil refiner and once a major trading partner for iran), who told me that if any deal with west happens they would love to invest there

thats very good my friend , indeed any relation with india and pakistan is welcome

 

[Armstrong]

I understand your points and concerns. I think the best option for you is trying to use your excellent relations with china and bring them on the deal. In this case, you would need to spend less for building the pipeline and you would enjoy the transfer gas income. Iran has a 20 years exporting gas deal with China, so we can assume that you should not be worried about an extra agreement between Iran and China. BTW, why don't you try to buy electricity from Iran by a UHV line? Iran has a lot of idle electricity capacity, and building such a line would need less time and money.

We do import electricity from Iran !

More maybe imported but I think the problem is that (i) its a little like the IP from a certain point of view & if you guys start earning an extra few billions of $s from that due to increased electricity exports to Pakistan the American Administration would again have an issue with that hence the looming sanctions & (ii) the line losses could be significant because Baluchistan - the Province that borders Iran - is perhaps Pakistan's 44% by land mass but only 2-3% by population which means the demand isn't going to be there barring that which we already import from Iran (I think its currently 500MW) & the transmission lines would need to cross over hundreds perhaps close to a thousand km of land to reach the more populated areas of Pakistan which would make it economically unfeasible due to the line losses along the way !

On the China thing - I think as soon as the Separatist Insurgency in Baluchistan quells down & Gwadar gets developed a bit more we can see more energy imports from Iran to cater for Gwadar & maybe even a pipe-line from Iran-Pakistan-China but thats probably a decade or two away !

 

[rmi5]

Really?! I did not know that

Yes, there is about 10,000 MW unused electricity production capacity.

 

[rmi5]

We do import electricity from Iran !

More maybe imported but I think the problem is that (i) its a little like the IP from a certain point of view & if you guys start earning an extra few billions of $s from that due to increased electricity exports to Pakistan the American Administration would again have an issue with that hence the looming sanctions & (ii) the line losses could be significant because Baluchistan - the Province that borders Iran - is perhaps Pakistan's 44% by land mass but only 2-3% by population which means the demand isn't going to be there barring that which we already import from Iran (I think its currently 500MW) & the transmission lines would need to cross over hundreds perhaps close to a thousand km of land to reach the more populated areas of Pakistan which would make it economically unfeasible due to the line losses along the way !

On the China thing - I think as soon as the Separatist Insurgency in Baluchistan quells down & Gwadar gets developed a bit more we can see more energy imports from Iran to cater for Gwadar & maybe even a pipe-line from Iran-Pakistan-China but thats probably a decade or two away !

Yes, I know it. But unfortunately it is limited to border posts and cities of Pakistan. About the line losses, That's why I suggested a UHV DC line, as Russia , China, and Japan have done before, which minimizes the loss in very long distances, they can even build a line from the Iranian border to Punjab through the un-inhabited areas, with low loss and money spending. Anyway, Still the US policies issues remains the same in this case.

 

[rmi5]

@haman10 and @rmi5 i was in particular keen to explore the oppurtunities for Indian private sector I myself have friends in essar oil(a big indian oil refiner and once a major trading partner for iran), who told me that if any deal with west happens they would love to invest there

The main problem is sanctions, otherwise you would be fine to invest as much as you like

 

[haman10]

bebin dalghak, haddeaghal dar morede chizhaee ke nemidooni chert nagoo. ino kasi mige ke 2 sal tooye bakhsh power system restructuring iran kar karde. to hamoon troll bazito edame bede va bahsaye elmi ro bezar bozorgtara anjam bedan.

bro please post that in english too .

youre an engineer so everyone knows whats going on . that troll is even trying to spew shyt about our national grid

 

[rmi5]

nemidoonam chera bazia dar har moredi alaghe daran zer zer konan.
haman jan ino vase hamoon taraf neveshtam nemikhastam baghye befahman.

haha, If you really have something against my comment, write it in English language, so every one can be informed about it. Otherwise, shut your mouth, and do not try to insult me in persian language
Anyway, As I know that you are lying, I give you the chance to read the below sources:
List of power stations in Iran - Wikipedia, the free encyclopedia
Ultra-high-voltage electricity transmission in China - Wikipedia, the free encyclopedia
List of countries by electricity production - Wikipedia, the free encyclopedia

 

[Sugarcane]

Just 9 pages, Bhartiis got tired too soon.

@ Topic : Although it's repetitive as some members have already said it and i also said many time in past, but again whatever people say there are some hard facts.

1. No bank/financial institution want to fund this project because of sanctions - foreign aside even our own national bank refused, we don't have any relations with Russia, China would have helped only if it was IPC --- I am sure behind the curtains China would have negotiated something else for not supporting it - maybe something with US or maybe nuclear plants with Pakistan - after all at the end everyone looks after it;s own interests .

2. I was watching a debate couple of weeks ago where an official from oil & gas sector was telling that even if get the funds than still we need some machinery (compressors or whatever that is i don't remember nor i am technical) which only Simens & GE make both are American companies. (i don't know how true it is, maybe @niaz can shed some light)

3. Even somehow we complete it than how we are going to pay the gas bill, unless Iran want to sell us gas like she is selling oil to India i.e. Payments are being accumulated in papers or settled in INR or imports from India

4. Formula of pricing agreed is not feasible now it's linked to oil prices and oil prices are going upwards on other hand gas prices are decreasing in international market. One more interested thing in same debate i mentioned above was that if we buy directly electricity from Iran at current rates we are buying for Gawadar will still be cheaper (even after taking into account line losses) than we generate electricity from gas imported from Iran under current agreed rates.

5. We can buy LNG --- although little expensive than Iran gas but sanctions free plus it will not be dependent on one supplier.

6. We need gas to run our industry, and our largest customers are US, Europe than middle east - so, there is no point in running industry when you will lose customers.

So, this pipeline is dependent on how Iran govt. negotiate with west and get out of sanctions, and than you will see that India will jump in again. When India is agree with US backed TAPI than it's clear that security situation was just an excuse, fact is that India got civil nuclear deal at cost of IPI which infect is more beneficial for India from strategic point of view (Pakistani idiotic diplomats should learn something from India)

Signing of contract was political move of Zardari to create troubles for next govt. as he knew that his party is not gonna win and in Iran Mr. Ahmadinijad wanted something to show at diplomatic front (as his policies were mostly disastrous for Iran in international politics and also economy). So, both out going Presidents just scored some points and created problems for next governments.

So, IMHO - this project will not be abandoned but deferred, If Iran's negotiation with P5+1 goes well than it will become on track again otherwise it will be shelved for longer period.

 

[KingMamba]

I said it was dumb of us to build this pipeline.

No you didn't.

we dont care about it , yes .

but india which is turning to be our very strong friend has nothing to do with this

Your strong friend left this project long before Pakistan has even thought about doing so, your strong friend voted against you in UN, your strong friend cut its oil exports from you guys until you agreed to take their weakened rupee as payment, and despite all that your strong friend still owes you some funds. Nice friend.

 

[acid rain]

Just 9 pages, Bhartiis got tired too soon.

@ Topic : Although it's repetitive as some members have already said it and i also said many time in past, but again whatever people say there are some hard facts.

1. No bank/financial institution want to fund this project because of sanctions - foreign aside even our own national bank refused, we don't have any relations with Russia, China would have helped only if it was IPC --- I am sure behind the curtains China would have negotiated something else for not supporting it - maybe something with US or maybe nuclear plants with Pakistan - after all at the end everyone looks after it;s own interests .

2. I was watching a debate couple of weeks ago where an official from oil & gas sector was telling that even if get the funds than still we need some machinery (compressors or whatever that is i don't remember nor i am technical) which only Simens & GE make both are American companies. (i don't know how true it is, maybe @niaz can shed some light)

3. Even somehow we complete it than how we are going to pay the gas bill, unless Iran want to sell us gas like she is selling oil to India i.e. Payments are being accumulated in papers or settled in INR or imports from India

4. Formula of pricing agreed is not feasible now it's linked to oil prices and oil prices are going upwards on other hand gas prices are decreasing in international market. One more interested thing in same debate i mentioned above was that if we buy directly electricity from Iran at current rates we are buying for Gawadar will still be cheaper (even after taking into account line losses) than we generate electricity from gas imported from Iran under current agreed rates.

5. We can buy LNG --- although little expensive than Iran gas but sanctions free plus it will not be dependent on one supplier.

6. We need gas to run our industry, and our largest customers are US, Europe than middle east - so, there is no point in running industry when you will lose customers.

So, this pipeline is dependent on how Iran govt. negotiate with west and get out of sanctions, and than you will see that India will jump in again. When India is agree with US backed TAPI than it's clear that security situation was just an excuse, fact is that India got civil nuclear deal at cost of IPI which infect is more beneficial for India from strategic point of view (Pakistani idiotic diplomats should learn something from India)

Signing of contract was political move of Zardari to create troubles for next govt. as he knew that his party is not gonna win and in Iran Mr. Ahmadinijad wanted something to show at diplomatic front (as his policies were mostly disastrous for Iran in international politics and also economy). So, both out going Presidents just scored some points and created problems for next governments.

So, IMHO - this project will not be abandoned but deferred, If Iran's negotiation with P5+1 goes well than it will become on track again otherwise it will be shelved for longer period.

All your points are right except the last para. Nawaz Sharif must have got clear instructions from Saudis regarding Iran and IP as a no go. It will most likely get buried for 5 years of NS and by the time it will be extinct. Under Zardari at least your relations with Iran was going somewhere - now you willl be lucky if the border skrimishes are minimal.

I am just glad that India stayed away from this pipeline circus and did not invest a penny on it or else we too would be left in the lurch like howw Iran has been made a mockery of.

No you didn't.



Your strong friend left this project long before Pakistan has even thought about doing so, your strong friend voted against you in UN, your strong friend cut its oil exports from you guys until you agreed to take their weakened rupee as payment, and despite all that your strong friend still owes you some funds. Nice friend.

We left because of Pakistan and we were proved right in the end...as for UN, thats our choice and what we see as right or wrong....we arent llapdogs of anyone. Regarding the reduction in oil imports...china too cut its purchases and that was due to the sanctions that affected making payments and no insurance on oil vessels...but Pakistan caused billions of dollars of losses to Iran who you conveniently left in the lurch to bear the humiliation and the losses.

 

[KingMamba]

We left because of Pakistan and we were proved right in the end...as for UN, thats our choice and what we see as right or wrong....we arent llapdogs of anyone. Regarding the reduction in oil imports...china too cut its purchases and that was due to the sanctions that affected making payments and no insurance on oil vessels...but Pakistan caused billions of dollars of losses to Iran who you conveniently left in the lurch to bear the humiliation and the losses.

TAPI pipeline has a P in it for what? Yet India hasn't said TAPI is off the table. So blatant lie right there. Yes it was your choice to vote against Iran but if you were really friends you could have just as easily had abstained. Nope many articles dispute Chinese cutting oil imports while many confirm India as doing so and every time you Indians brought it up Chinese members proved you wrong especially ChineseDragon. Also you even tried to take advantage of Iran by dumping your currency on them when your currency was dropping in value. Before you guys had a barter system with them where you paid in goods then you froze imports and withheld payment until they took your rupees. What losses did Pakistan cause Iran? When you go ahead with a project you make investments that is what Iran did, now if Pakistan does cancel this deal then that is why Iran put penalty provisions and they will get their money back but as of right not the project is still on despite its murky outlook and while this one article says it is nixed others say Pakistani ministers are headed to Iran sometime next week to talk about the pipeline.

 

[Sugarcane]

All your points are right except the last para. Nawaz Sharif must have got clear instructions from Saudis regarding Iran and IP as a no go. It will most likely get buried for 5 years of NS and by the time it will be extinct. Under Zardari at least your relations with Iran was going somewhere - now you willl be lucky if the border skrimishes are minimal.

I am just glad that India stayed away from this pipeline circus and did not invest a penny on it or else we too would be left in the lurch like howw Iran has been made a mockery of.

Well - He defiantly is pro-KSA - so is our establishment but i think in this case sanctions are major factor. No, there was nothing going on under Zardari as well, We never had any army over Iranian border, nor are Iranian policy makers idiots, so - there is no chance of border skirmishes.

As i already mentioned India no doubt played well in this and is actual winner.