Thursday, November 17, 2011

#Iran #Pakistan :Pakistan to renegotiate price formula with Iran

Pakistan to renegotiate price formula with Iran

* Dr Asim says resettlement of price will save around $100 million

* Survey and design work on project complete

By Zeeshan Javaid

ISLAMABAD: Pakistan has decided to renegotiate the gas price formula with Iran under the long awaited $1.25 billion Iran Pakistan (IP) gas pipeline project, to compete with the price mechanism settled under Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline project with Turkmen government.

Islamabad and Tehran inked the Gas Sales Purchase Agreement (GSPA) of IP gas pipeline project in June 2009 within certain terms and conditions, including that Pakistan would pay 78 percent of crude oil parity price to Iran after mutual consensus of both countries.
“After inking GSPA with Turkmen president under $7.6 billion TAPI gas pipeline project today at Islamabad, federal government would start the renegotiation process with Tehran over gas import under IP project to bring the gas purchase price from 78 percent of crude oil price in international market to downward,” said Federal Minister for Petroleum and Natural Resources Dr Asim Hussain.

Talking to media men, Hussain said that gas purchase price would be resettled with Iran and resettlement of new price would save $100 million from the actual cost $1.25 billion of IP gas pipeline project.

 He further said that survey and design work on Pak-Iran gas pipeline has been completed, and that gas shortage would be overcome early next year. “200mmcf more gas is expected from domestic sources which would help overcome shortage during winter,” he said.

Because of severe disagreements between US and Iran, Washington has expressed serious concerns over IP project and has been forcing Pakistan to abandon this project and shift to TAPI project.

Energy managers in the ministry claimed that Iranian government has completed the IPI project pipeline section of 1100km, however, the work on the Pakistani side would start before end of ongoing year.

Lack of funds and worsening law and order situation in Balochistan has delayed the construction work According to well-informed officials in the energy sector, construction work on the 750km pipeline is likely be completed by the end of this month, while a 42 inches diameter pipeline would be installed to connect Baluchistan, Sindh and Punjab through the Khuzdar to Karachi at a cost of $1.25 billion.

Pakistan would be required to pay 70 percent of the price of Crude Oil in international market for the gas imported under $7.6 billion Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline project.

The Gas Sales Purchase Agreement (GSPA) of TAPI project between both countries would be inked today (Monday) during a one-day visit of Turkmen President Kurbanguly Berdymukhamedov to Islamabad.

The gas volume in TAPI pipeline would be 3.2 billion cubic feet per day (bcfd) out of which 500 million cubic feet per day would be bought by Afghanistan, whereas both Pakistan and India would buy 1,325 mmcfd gas each from the project. The previous source of pipeline project was Daulatabad but now it had been relocated to South Yolstan/Osman in Turkmenistan.

The petroleum minister claimed that gas shortage would be crucial during first quarter of next year, therefore supply to industries and gas stations would be shut down for three days a week in winter and provision of uninterrupted gas supply would be ensured to domestic consumers on priority basis during ongoing winter season.