Islamic Iran offers $500m for IP gas project

Islamic Republic of Iran has said it is ready to extend $500 million to Pakistan for laying the pipeline from the Pak-Iran border to Nawabshah under the IP gas pipeline project, a media report said on Thursday.

Daily ‘The News’ said Iran also expressed its readiness to export 70,000 to 80,000 barrels of crude oil per day to Pakistan during the recent meeting between the officials of the two countries in Tehran.

Pakistan’s seven-member delegation, headed by joint (development), ministry of petroleum and natural resources has visited Iran and held talks on vital issues pertaining to IP gas pipeline funding, import of crude oil and exploring avenues to invest in exploration and production activities in Iran, a senior official said.

‘Iran also invited OGDCL and PPL (Pakistan Petroleum Limited) to take part in exploration and production activities in Iran,’ he said.

Iran had earlier made an informal offer to provide $250 million for the pipeline. The Pakistani delegation went to Iran to get solid promise for funding the pipeline, but the Iranian authorities said they were ready to jack up the realer offer to $500 million.

Pakistan is very much interested in importing 70,000-80,000 bpd crude oil in exchange for food items.

To a question he said that an Iranian delegation would visit Pakistan next week for further talks.

The gas pipeline from MP 250, a point at the Pak-Iran border, to Nawabshah with 800 kilometres length is to be commissioned by December 2014 and the project will inject 750 mmcfd of gas into Pakistan’s system.

The gas will be used for power generation, reducing reliance on furnace oil as fuel for thermal power. Pakistan is facing a huge gas deficit of over 2 billion cubic feet per day as its production stands at 4.2 billion cubic feet. The import of gas from Iran will help ease the gas deficit to a reasonable level.

In case the project get delayed beyond the deadline of December 31, 2014, Pakistan will have to pay $1 million per day to Iran as penalty.

To a question the official said Russia has also been approached to fund the project but it has not made any commitment yet.

Russia wants Pakistan to set aside the Public Procurement Regulatory Authority’s (PPRA) rules to complete the mega project for which international bidding is a must under PPRA rules.