With negotiators from the US and Iran scrambling to find a lasting solution to the war that includes sanctions relief for Tehran, Pakistan is looking at an economic windfall of its own as well.
The lifting of sanctions will potentially clear the way for one of Islamabad’s most ambitious energy projects: the much-delayed Iran-Pakistan gas pipeline, sometimes described as the country’s largest unrealised energy infrastructure venture.
Iran has the world’s second-largest proven natural gas reserves. But the country has been under sanctions of varying degrees for decades, effectively barring Tehran from using the dollar-based international financial system.
Moreover, the threat of secondary sanctions – which target countries, banks and businesses that deal with Iranian companies – discouraged potential trade partners from using even non-dollarised, alternative payment mechanisms to settle transactions.
But the expected removal of sanctions at the end of the post-ceasefire 60-day window offers countries such as Pakistan a real chance to restart work on long-delayed energy cooperation projects.
Iran has already completed its roughly 1,150km section of the pipeline from the South Pars field, the world’s largest natural gas deposit that Iran shares with Qatar.
But the 781km segment of the planned pipeline in Pakistani territory remains unbuilt, mainly due to sanctions-related constraints.
At the same time, households across Pakistan have been facing a severe shortage of natural gas over the last few decades. That’s mainly because supplies from domestic gas fields have been declining at a rapid pace.
Even though Pakistan has set up two dedicated terminals to import liquefied natural gas (LNG) from Qatar over the last decade, gas shortages persist for a variety of reasons. For instance, imported LNG is expensive compared to gas, which comes from domestic fields.
Government officials and experts say there is serious interest in Islamabad in reviving the Iran-Pakistan gas pipeline.
However, opinions differ sharply on the conditions required to make the long-dormant project viable.
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Strong interest, with caveats
Moin Raza Khan, former CEO of Pakistan Petroleum, a state-owned energy conglomerate, tells TRT World that the revival of the project appears to be at the top of the policymakers’ agenda in Islamabad.
“Economically, the case remains strong: pipeline gas would be cheaper and more reliable than LNG cargoes that are exposed to maritime disruption, insurance shocks, and conflict-related delays,” he says.
The settlement of the US-Israeli war against Iran must not mean a mere ceasefire of hostilities, he says.
Rather, it should be used to launch a region-wide programme to revive the gas pipeline and fast-track its implementation as soon as sanctions on Iran are lifted at the end of the 60-day window.
Masood Siddiqui, former managing director of Oil and Gas Development Company, Pakistan’s largest energy exploration firm, is equally optimistic about the renewal of the mega infrastructure project.
“There’s definitely serious interest among Pakistani officials. I’d say that might be like Agenda Item No 1,” he tells TRT World.
He is dismissive of some analysts who insist that Pakistan actually has “excess supply of gas” because of its long-term gas import agreements with Qatar.
“We do have serious gas shortages. Those who say we have plenty of gas, they don’t know what they’re talking about,” he says.
Abid Qaiyum Suleri, executive director of Islamabad-based think tank Sustainable Development Policy Institute, tells TRT World that Pakistan’s interest in realising the pipeline project with Iran is “serious” but “conditional”.
