Pakistan to go ahead with Iran gas pipeline deal

Pakistan's federal minister for petroleum and natural resources Shahid Khaqan Abbasi has said the newly-elected government would honour the Iran-Pakistan gas pipeline deal, as the agreement was signed between two sovereign countries.

Pakistan had signed the deal, so the Pakistan Muslim League-Nawaz (PML-N) government would honour it, the minister said in Islamabad on Friday, without mentioning the previous Pakistan Peoples' Party (PPP) government.

He, however, admitted that there are issues to be sorted out, including pricing and impact of the sanctions imposed by the US and EU countries. ''I have not been so far briefed on the project. So I am not in a position to talk on this more,'' the minister said.

''We have asked the foreign office to let us know about the impact of the sanctions imposed on Iran by US and EU countries on Pakistan once this project gets completed.

''I haven't looked into the IP agreement so far and the gas sales price agreement. However, we need the gas price at lower side, but to assess this I still need to look into the gas sales price agreement under the IP project,'' the minister said.

On his government's ability to manage the oil facility from Saudi Arabia, Abbas said he had no indication from the ''brotherly'' country.

Promising transparency in the appointment of new heads of 12 departments attached to the oil ministry, he said advertisements would soon be placed in the national and international press.

Despite pressure from the US, the new Pakistan government has announced in its annual plan for 2013-14 that it will implement the Iran-Pakistan gas pipeline project and target the first flow of gas for December 2014.

According to the energy strategy unveiled by the government in the annual plan released on Wednesday, the pipeline's cost has been reduced from an earlier estimate of $1.5 billion to $1.25 billion.

Pakistan intends to import 750 mmcfd of gas through the pipeline to generate 4,000 MW of electricity to overcome a power crisis.

According to the plan, the government would appoint a third party inspection agency for the project in June-July to procure equipment and material so as to begin construction in fiscal 2013-14.