Pakistan has announced plans to build a gas pipeline within its territory to import gas from Iran, following a notice of potential arbitration and a $18 billion compensation claim from the Iranian government.

Pakistan's decision to build a gas pipeline within its territory came as a response to Iran's third notice issued in December 2023. The notice demanded the completion of the pipeline project by September 2024, threatening legal action.

According to the report, sources in the Pakistani oil department reveal that if the deadline is not met, Iran may seek damages at an international arbitration forum in Paris, adding a sense of urgency to the situation.

Initially agreed upon in 2014, the project has faced delays due to US sanctions against Iran. Pakistan maintains that these sanctions prevent the project's implementation, while Iran points to gas exports to Turkey and Iraq as evidence that sanctions do not pose a barrier.

To address immediate gas needs in the Gwadar and Makran regions, the Pakistani government has authorized Sui gas companies to lay an 81-kilometer pipeline from Gwadar to the Iranian border. This separate project is not part of the larger pipeline agreement.

A delegation of Iranian legal and technical experts is expected to visit Pakistan this month for further negotiations on the main pipeline project.

The Iran-Pakistan gas pipeline, also known as the Peace Pipeline, has been in the works since 1994. The project aimed to deliver Iranian gas to Pakistan and potentially India through a 2,775-kilometer pipeline.

However, it has faced numerous delays due to various factors, including US sanctions and internal disagreements within Pakistan.