Iran extends IP gas line project deadline by 180 days, warns of international arbitration

Iran has granted a 180-day extension to the deadline for the long-pending Iran-Pakistan (IP) gas line project, pushing the timeline to September 2024.

Government officials have conveyed that if Islamabad does not respond positively, Tehran will seek international arbitration in Paris, aiming for a penalty of $18 billion.

To avert arbitration, Iran has proposed sending a joint legal and technical team to Pakistan within the extended deadline to collaboratively formulate a mutually beneficial strategy for the project’s realization.

Initially scheduled for talks on January 21-24, the Iranian technical and legal experts’ team faced delays due to heightened tensions between the two nations.

The officials now reveal that the team is expected to arrive in Islamabad in the second week of February.

The teams from both sides will establish coordination committees to devise an implementable strategy for the IP gas line project.

The Iranian delegation comprises experts in international relations laws, legal frameworks, and engineering.

The project, facing delays since 2014, Pakistan received the last notice almost 25 days ago.

In November-December 2022, Iran issued its second notice, demanding Pakistan to construct a portion of the gas line project in its territory by February-March 2024 or face an $18 billion penalty. In February 2019, Tehran had previously warned Islamabad of moving to arbitration for not meeting the project’s stipulated timeline.

Signed in 2009 for a 25-year duration under French law, the Gas Sales Purchase Agreement (GSPA) has faced challenges in materializing.

Pakistan argues its inability to proceed with the project within its territory due to US sanctions on Iran, a stance contested by Iranian authorities who deem the US sanctions unjustified.

While Iraq and Turkey have secured waivers for utilizing gas from Iran despite US sanctions, Pakistan’s attempts to seek clarification from US authorities on potential impacts have gone unanswered.

The Paris-based Arbitration Court, designated by the GSPA, is set to be the forum for resolving disputes between the two countries, emphasizing its non-recognition of US sanctions.