Pakistan advances on Iran gas pipeline to avoid $18bn fine

Islamabad initiated talks with Tehran, committing to finalise the initial phase of the 80-kilometer Iran-Pakistan (IP) gas pipeline project within its territory to prevent a potential $18 billion fine.

The Petroleum Division is seeking cabinet approval to start the IP gas pipeline project, and the board of Gas Infrastructure Development Cess (GIDC) has been instructed to accelerate the financing of this initiative.

Reports indicate that Iran extended the project deadline by 180 days until September 2024 to avoid any legal disputes in international courts. 

This extension aims to prevent potential litigation and the strain it could cause on diplomatic ties between Pakistan and Iran, as Tehran may seek legal recourse to protect its interests in the pipeline project.

In response to these developments and despite facing sanctions from the United States, Pakistan has resolved to move forward with the pipeline's construction on its soil to meet Tehran's requirements.

Iran has completed its section of the pipeline, spending $2 billion, while Pakistan has yet to begin construction. 

Previously, the 80km segment of the IP pipeline was part of the LNG Gwadar Pipeline project, which would connect Gwadar with other national regions. 

It was decided that Pakistan could undertake this construction if the diplomatic climate between Tehran and Washington improved and Pakistan received an exemption.

However, due to Iran's increasing pressure, Pakistan has decided to construct a segment of the IP gas pipeline on its territory.