China Foots the Bill for Iranian Gas Pipeline to Solve Pakistan’s Energy Crisis

Pakistan’s Prime Minister Nawaf Sharif deserted his longstanding ally in Riyadh on the promise of a new era for his country to be ushered in by Chinese President Xi Jinping when he visits Islamabad next week.
State Minister for Privatization Muhammad Zubair said in Islamabad this week that China would invest more than $40 billion in “Pak-China Economic Corridor” projects.
This framework would give Pakistan the key to resolving its chronic energy crisis. The nub of this solution is a pipeline for bringing natural gas from Iran to Pakistan. The Iranian portion is complete. Beijing would put up the estimated $2 billion to build the Pakistani segment. To get full-size map click HERE.
Completion of the pipeline depends on the nuclear talks between Iran and the six world powers progressing towards a final deal by June 30. The concomitant sanctions relief is expected to kick off with the termination of the ban on Iranian energy exports.
The US has warned Pakistan that it faces penalties too if it jumps the gun and goes forward with the scheme while Iran was still under sanction.
But the project has gained traction from the tentative progress made toward a final nuclear accord in the Lausanne talks and the promise of imminent sanctions relief.

Pakistan opts for stronger ties with Saudi Arabia’s adversary, Iran

Instead of sending troops as back-up for the Saudi campaign against Iran’s Yemeni proxies (see separate article), the Pakistani prime minister has chosen to jump into the queue of governments and businesses waiting for Iran’s reprieve from sanctions.
The new Peace Pipeline is bound to strengthen ties between Islamabad and Tehran, based on China’s willingness to upgrade infrastructure in both countries. Pakistan is negotiating for China to construct the 700-kilometer segment of the pipeline linking the Iranian gas fields to Pakistan’s gas-distribution pipeline network at Nawabshah in Sindh province.
The negotiations held with the China Petroleum Pipeline Bureau, a subsidiary of the China National Petroleum Corporation, are for Beijing to put up 85 percent of the financing with a loan, while Pakistan covers the balance.
This segment will not be connected to the Iran line until the Iranian nuclear deal is cleared.
When the project is finished in an estimated two years, Pakistan’s entire electricity deficit is calculated to be covered by imported Iranian gas.
Pakistan is also discussing gas supplies from Qatar and negotiating a transaction for a pipeline to carry gas from Turkmenistan through Afghanistan to Pakistan and India. Washington has been urging Islamabad to favor the Turkmenistan pipeline over the link to Iran.

Print Friendly, PDF & Email