Pakistan, Iran set to work on gas pipeline

Islamabad, May 7 :

Pakistan and Iran have agreed to work on a bilateral gas pipeline project regardless of whether India wants to join an eventual Iran-Pakistan-India (IPI) project. Hasan Nawab, managing director of Inter State Gas (Pvt) Ltd, said the estimated cost of the project for

Pakistan would be around $2.5 billion.

“Whether India joins or not, Pakistan cannot delay the project. But if India joins, the project would be more feasible,” Hasan said.

The IPI project is estimated to fetch Pakistan 2.8 billion cubic feet gas per day at a cost of $2-3 billion per annum. Pakistan would focus on integrating the gas pipeline with the country’s energy system by 2011 as “after 2010 local production will start to decline”, he said.

On the security measures for the project, he said it was a natural, normal requirement and was under consideration. “There would be an element of cost related to the issue but it would not have any major impact on the overall project. The royalty issue is also under consideration and it will be negotiated according to international norms,” he said, “Nothing has been decided on this part.”

“The gas pricing formula is another area that needs to be finalised though gas prices are somehow linked with crude, which is not only volatile but also difficult to predict. The government motive is to design a system, which can limit price volatility,” Hasan said.

Two companies, SSGC and SNGPL, cater to gas distribution in Pakistan. “The distribution of the new facility would be under them, even if they get privatised,” he said.

The two companies are distributing 2.8 billion cubic feet gas and the new facility of 2.8 billion cubic feet would further increase their distribution capacity.

According to Hasan, the available gas reserves in the country are far less than the country’s requirement.