Gas pipeline project 'impossible' under US sanctions, Pakistan tells Iran

In this April 22, 2019 file photo, Iranian President Hassan Rouhani and Pakistani Prime Minister Imran Khan are addressing a joint press conference in Tehran. Pakistan has informed Iran in writing that it cannot execute the Iran-Pakistan gas pipeline project as long as Tehran is under a United States sanctions regime. (AFP)
Updated 11 May 2019

Gas pipeline project 'impossible' under US sanctions, Pakistan tells Iran

  • Iran issued notice to Pakistan in February threatening international arbitration over failure to fulfil agreement
  • Pakistan may have to pay billions in penalties if Iran goes to court, has until August to respond to Tehran

ISLAMABAD: Pakistan has informed Iran in writing that it cannot execute the Iran-Pakistan gas pipeline project as long as Tehran is under a United States sanctions regime, a top official at Pakistan’s state-owned Inter State Gas Systems said on Friday, driving a final nail in the coffin of a project that was conceived in the 1990s to connect Iran’s giant South Pars gas field to India via Pakistan.
The US has steadfastly opposed Pakistani and Indian involvement in the $7 billion project, saying it violates sanctions. India quit the project in 2009, citing costs and security issues, a year after it signed a nuclear deal with Washington.
US sanctions against Iran are a major hindrance for most gas pipeline projects in the region. The President Donald Trump administration has warned countries around the world to stop buying Iranian oil or face sanctions of their own. Washington’s European allies have tried and failed to come up with ways to blunt the economic impact of the US move.
“Under present US sanctions on Iran, it is impossible to execute the IP [Iran-Pakistan] gas pipeline project and we have conveyed it to them [Iran] in writing recently,” Mobin Saulat, the managing director of Inter State Gas Systems told Arab News.
The company, which falls under the Pakistani Ministry of Energy’s Petroleum Division, has been mandated by the government to develop natural gas import projects, including the Iran-Pakistan pipeline.
A new round of negotiations was recently launched between Pakistan and Iran after Tehran formally issued a notice to Islamabad in February this year, saying it was moving an arbitration court against Pakistan for failing to lay down the pipeline in Pakistani territory in the timeframe stipulated in the bilateral agreement.
“We have time till August this year to legally respond to Iran’s legal notice and settle the issue through negotiations,” Saulat said. “We are hopeful to find a solution through discussions with Iranian officials.”
Under an agreement signed between the two countries in 2009, the project was to be completed by December 2014 and would deliver 21.5 million cubic meters (760,000 million cubic feet) of gas per day to Pakistan. It was to be constructed using a segmented approach – Iran had to lay down the pipeline on its side and Pakistan was supposed to build the pipeline on its territory.
Under a penalty clause, Pakistan is bound to pay $1 million per day to Iran from January 1, 2015 for failing to build its part of the pipeline. If Iran takes the case to an arbitration court, Pakistan will likely to have to pay billions of dollars as penalty.
Saulat said Pakistan was still committed to executing the project, but only if international sanctions on Iran were lifted.
“We cannot risk US sanctions by going ahead with the project as America has clearly said that anybody who will work with Iran will also be sanctioned,” Saulat said.
He said Iranian authorities were of the view that US sanctions did not apply to the IP gas project, adding that Pakistan had thus sent Tehran a questionnaire to ascertain exactly how that was the case.
“We may not have a weak case if Iran moves the international court,” Saulat said. “We are trying to handle it professionally.”


India delays signing Kartarpur corridor deal with Pakistan

Updated 22 October 2019

India delays signing Kartarpur corridor deal with Pakistan

  • Border crossing will give pilgrims visa-free access to holy Sikh shrine
  • Former Indian Prime Minister Dr. Manmohan Singh expected to attend the inaugural ceremony

NEW DELHI, LAHORE: India has postponed signing a deal that will allow Sikhs to visit a holy shrine in neighboring Pakistan without a visa, a Foreign Ministry official in New Delhi was reported as saying.
The Kartarpur Corridor connects the Sikh shrines of Dera Baba Nanak Sahib, in India’s Punjab region, to the Gurdwara Darbar Sahib in Kartarpur, Pakistan.
The visa-free border crossing will be inaugurated next month, days ahead of one of Sikhism’s most sacred festivals and the 550th birthday of the religion’s founder.
Media reports said that the signing of the deal had been pushed back by a day to Oct. 24 and that C L Das, an official handling internal security at India’s Ministry of Home Affairs, would meet Pakistan officials along the border to sign the agreement.
The corridor is a rare example of cooperation and diplomacy between the two South Asian rivals, who came to the brink of war in February following a suicide attack in Indian-administered Kashmir.
Ties nose-dived further in August when India flooded its portion of the disputed valley with troops, imposed a communications lockdown and revoked the special legal status of the territory.
But finalizing the corridor project has proved tricky.
Earlier this week, India’s External Affairs Ministry said it was disappointed by Pakistan’s decision to levy a $20 service fee per pilgrim.
“It is a matter of disappointment that while understanding has been reached on most of the elements for facilitating the visit of pilgrims from India, Pakistan continue to insist on levying a service fee," said the ministry. "Government has consistently urged Pakistan that in deference to the wishes of the pilgrims, it should not levy such a fee. While agreeing to sign the agreement, the government of Pakistan has been once again urged to reconsider its insistence to levy service fee on pilgrims. India would be ready to amend the agreement accordingly at any time.”
The connecting bridge at the border was also a significant issue. India favored an elevated bridge but Pakistan was only willing to build an embankment, fearing a possible breach in security.
New Delhi said all the infrastructure was in place in time for the project’s inauguration, which is expected to be attended by former Indian Prime Minister Dr. Manmohan Singh.
Islamabad has also invited Singh to be part of the inaugural ceremony but he has yet to accept. Despite the bumps in the road Pakistani Prime Minister Imran Khan was upbeat about the unveiling.
“Pakistan is all set to open its doors for Sikhs from all across the globe, as the construction work on the Kartarpur project enters final stages and will be open to the public on 9th November 2019,” he posted on Facebook. “World’s largest gurdwara will be visited by Sikhs from across India and other parts of the world.”
Although the opening of the corridor is unlikely to lead to any kind of bilateral engagement or rapprochement between the two nations, Sikhs will be relieved that it is easier to access the shrine in Kartarpur.
The community has long sought easier access to Kartarpur, a village just four kilometers over the border in Pakistan, as it used to demand a lengthy visa and travel process.
Pilgrims will get special permits to access the shrine. Up to 5,000 pilgrims will be allowed to access the corridor daily.
Indian Prime Minister Narendra Modi will inaugurate the Indian side of the corridor, but it is unclear if he will cross into Pakistan afterwards.