• 50 mins Here’s Your Chance To Blow Up An Oil Pipeline
  • 2 hours Shell Restarts Bonny Light Exports
  • 4 hours Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 10 hours Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 15 hours British Utility Companies Brace For Major Reforms
  • 19 hours Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 21 hours Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 22 hours Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 23 hours OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 24 hours London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 1 day Rosneft Signs $400M Deal With Kurdistan
  • 1 day Kinder Morgan Warns About Trans Mountain Delays
  • 1 day India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 2 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 2 days Russia, Saudis Team Up To Boost Fracking Tech
  • 2 days Conflicting News Spurs Doubt On Aramco IPO
  • 2 days Exxon Starts Production At New Refinery In Texas
  • 2 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 3 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 3 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 3 days China To Take 5% Of Rosneft’s Output In New Deal
  • 3 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 3 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 3 days VW Fails To Secure Critical Commodity For EVs
  • 3 days Enbridge Pipeline Expansion Finally Approved
  • 3 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 3 days OPEC Oil Deal Compliance Falls To 86%
  • 4 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 4 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 4 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 4 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 4 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 4 days Aramco Says No Plans To Shelve IPO
  • 7 days Trump Passes Iran Nuclear Deal Back to Congress
  • 7 days Texas Shutters More Coal-Fired Plants
  • 7 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 7 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 7 days Chevron Quits Australian Deepwater Oil Exploration
  • 7 days Europe Braces For End Of Iran Nuclear Deal
  • 8 days Renewable Energy Startup Powering Native American Protest Camp
Alt Text

2 Red Flags For The World’s Top Shale Play

Changing legislation and taxation for…

Alt Text

The Natural Gas Market Is Set To Boom

With the new lower-for-longer oil…

Iran-Pakistan Natural Gas Pipeline Stumbles on Financing

Iran-Pakistan Natural Gas Pipeline Stumbles on Financing

It is hard not to feel some sympathy for Pakistan’s current energy deficit problems, which are both severe and increasing.

The U.S. government’s Energy Information Administration notes in its “country analysis” on Pakistan, “Pakistan's economy has continued to struggle with underemployment, slow economic growth, and high inflation. Pakistan's inability to meet domestic energy demand has resulted in electricity outages, which is a key political and economic issue in the country. The electricity industry faces problems with power generation theft, poor collection rates, line losses, and the poor financial position of generation companies. These issues have led to load-shedding, the temporary shut-down of electric lines when demand is greater than supply, which has costs the economy an estimated $13.5 billion per year…”

Four months ago Pakistani newspaper, “Dawn,” noted, “Power can be out for up to 20 hours a day in the summer… The shortfalls that became the no. 1 issue in the recent election are estimated at 3,500 to 6,000 megawatts, up to a third of total demand…” before adding, “Combined with rampant theft of electricity and massive corruption in the country’s power sector, Pakistan’s ongoing energy shortages are unlikely to end anytime soon, whatever Islamabad does.”

Related article: Russia Opens LNG Floodgates

Despite Washington’s oft expressed displeasure, Pakistan has been engaged in lengthy discussions with Iran to construct a $7.5 billion “Peace Pipeline,” which would deliver 21.5 million cubic meters of natural gas a day to Pakistan from Iran’s massive offshore Persian Gulf South Pars field, currently being developed in conjunction with Qatar.

Aside from the political pressures from the U.S., the proposed pipeline has hit a significant snag – a lack of Pakistani funding.

While Iran desperately wants the pipeline, both as a source of hard currency and as an added hedge against possible U.S. military action, Tehran is increasingly frustrated with Islamabad’s apparent inability to come up with the cash to construct its portion of the pipeline. While Iran currently produces around 600 million cubic meters of gas per day, almost all of which is consumed domestically, production is predicted to surge when the Persian Gulf offshore South Pars field comes online. Currently Iran’s sole foreign natural gas client is Turkey, which buys about 30 million cmd.

Iran has nearly completed its segment of the pipeline but Pakistan has struggled to find the money to pay for the 485-mile section to be built on its side of the border. While in early October Pakistan asked Iran to provide $2 billion to finish construction. Iranian Oil Minister Bijan Zanganeh said on 31 October that there was “no hope” of exporting gas to Pakistan because the financing was not there.

Not so, according to Pakistan’s Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi, who said in a moment of transcendent honesty during an interview with Pakistan’s GEO TV, “There is absolutely no chance to abandon the pipeline project, because we need it.”

Outside funding is unlikely, as investors and other governments are reluctant to get involved in the project because of the threat of breaching international sanctions on Iran.

In a case of diplomatic ‘tough love,” Iranian Oil Minister Bijan Namdar Zanganeh told reporters in Tehran recently that “the contract for supplying gas to Pakistan is likely to be annulled.”

Related article: Ukraine Approves Major Shale Deal with Chevron

Zanganeh’s comments caused Pakistan Industrial and Trader Associations Front (PIAF) to issue a statement on 31 October, stating, "(Prime Minister) Nawaz Sharif should take timely measures to save this important deal and the private sector may be taken onboard on Pak-Iran Gas Pipeline Project as the recent statement of the Iranian Oil Minister has put this vital project in doubt."

Will Sharif take those timely measures?

Read your tea leaves, as Sharif is currently in Washington, meeting with President Obama, where no doubt the “Peace Pipeline” figured prominently on the agenda – along with Iran and drone strikes.

Given such a full plate, it seems unlikely that Sharif will give PIAF’s concerns the attention they are hoping for.

By. John C.K. Daly of Oilprice.com




Back to homepage


Leave a comment
  • Naheed on January 28 2014 said:
    IP pipeline dead, talk with TTP in Doha dead and Pakistan softened its stand on drone otherwise Kerry had historic visit. Drones are controlled by CIA and not State Department. Stay tuned for more revelations and story behind those smiling diplomatic niceties. Mian Sahib is acting on the directions of America not pursuing the interest of Country. It seems that he is prime minister of USA not Pakistan. He should learn from President Zardari who despite threats and pressure from USA pursued this project.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News