Pakistan Seeks Deadline Extension for Gas Pipeline Project with Iran to Avert Hefty Fines

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Pakistan Seeks Deadline Extension for Gas Pipeline Project with Iran to Avert Hefty Fines

Flags of Iran & Pakistan (© Shutterstock/esfera)
Flags of Iran & Pakistan (© Shutterstock/esfera)

Pakistan has sent a delegation to Iran to seek an extension for the deadline to complete its section of the Pak-Iran Gas Pipeline project.

A Pakistani delegation led by Energy Minister Muhammad Ali arrived in Tehran on Tuesday for talks with Iranian officials on the Pak-Iran Gas Pipeline project.

The discussions were expected to address critical aspects of the bilateral agreement, including Pakistan's request to extend the deadline for constructing its part of the pipeline, set to reach the Iranian border by March 2024. 

When completed, the pipeline will allow Pakistan to import 75 million cubic feet of gas per day from Iran as obligated under their bilateral agreement. In addition, the Pakistani delegation was expected to highlight the challenges posed by sanctions on Iran and seek an extension of the construction deadline in light of these circumstances.

The outcome of these talks holds significant implications for the future of the Pak-Iran Gas Pipeline project, with both countries navigating complex geopolitical and economic considerations in pursuit of their energy objectives.

Sources suggest that if Pakistan fails to meet this deadline, Iran may resort to legal action, potentially taking the matter to the International Court of Arbitration. In such a scenario, Pakistan could face a hefty fine of up to $18 billion.

The Pak-Iran Gas Pipeline project is a proposed 1,100-kilometer (684-mile) pipeline that would deliver massive quantities of natural gas from Iran to Pakistan. The project is estimated to cost $2.5 billion and has been in the works for several years.

Both countries are closely watching the outcome of these talks as they seek to overcome the challenges and move forward with the project, which has the potential to offer economic benefits for both countries. 

However, it remains to be seen whether the two sides will reach an agreement allowing the project to move forward.

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