Islamabad wants Tehran to suspend Iran-Pakistan gas pipeline obligations

Cites US sanctions as the reason

ISLAMABAD (Web Desk) – Expressing its inability to execute the much-delayed gas pipeline project because of external factors outside the country’s control, Pakistan issued notice of ‘Force Majeure and Excusing Event’ to Iran to suspend its contractual obligation.

The move comes about the multibillion dollar Iran-Pakistan (IP) gas pipeline with Minister of State for Petroleum Dr Musadik Malik giving a written testimony to the National Assembly, which read, “Pakistan has issued a Force Majeure and Excusing Event notice to Iran under the Gas Sales and Purchase Agreement (GSPA), which resultantly suspends Pakistan’s obligations under the GSPA.”

Malik said despite being fully committed to its contractual obligations under the GSPA, the Government of Pakistan had been unable to start construction of the pipeline due to US sanctions on Iran.

“The Government of Pakistan is engaged with the US authorities, through diplomatic channels, to seek exemption for the project. All necessary actions are being taken to construct the gas pipeline at the earliest.”

In his policy statement, the state minister added that Iran had disputed the notice, as he was replying to questions from Jamalud Din MNA, who wanted to know if the government had a target completion date for the cross-border energy project and whether fines were due in case of delays and if other regional nations were enhancing trade relations despite UN sanctions.

“The Iran Pakistan Gas Pipeline Project is stalled due to international sanctions on Iran,” said Malik said, adding that the project activities would restart once sanctions on Iran were removed and there was no threat of state-owned entities being hit by sanctions. “Given that, no date and deadline can be given for the completion of the Iran-Pakistan Gas Pipeline Project.”

However, the notice of force majeure and Iran’s response could only be finally settled through international arbitration, in case Tehran took the matter to arbitration. As a consequence, “the exact amount of penalty, if any, is subject to the outcome of the arbitration to be determined by the arbitrators.”

Malik also told the National Assembly that the indigenous gas supplies in Pakistan were depleting rapidly, whereas the demand of gas was increasing every year, thus widening the demand-supply gap.