Iran Finalised Peace Pipeline Deal with Pakistan

On 13 June 2010, Iran finalised ‘Peace Pipeline’ deal with Pakistan. Under ‘Peace Pipeline’ deal, Iran is likely to start exporting natural gas to Pakistan by 2015 and will continue to do so, on an average of one million cubic meters of natural gas daily to Pakistan for 25 years. The pipeline will connect Iran’s South Fars gas field to Pakistan’s Sindh and Baluchistan states. The project will help Pakistan fill its energy requirements as it faces energy crisis. The total cost of peace pipeline project is 7 billion US dollars.

• It was in 1990 that the project termed as Peace Pipeline was conceived first and included India as a third party besides Iran and Pakistan. The pipeline was to be extended to India from Pakistan. However, in 2009 India withdrew from the project because of its disagreement with Iran and Pakistan over pricing and security issues. Moreover, it had also signed nuclear deal with America in 2008, which discouraged India from having any deal with Iran. Despite all these developments, India has kept open its negotiating channels with both Iran and Pakistan.
• The length of the pipeline is 1000 km, of which 907km has already been constructed.
• Iran has the second largest reserves of natural gas in the world after Russia. However, it needs capital and infrastructure to develop the full potential of its gas reserves and to make itself a major exporter of the gas. Sanctions imposed by the West have only added to the problem.
• Under a deal signed in March 2010, Pakistan will charge a transit fee in case the proposed pipeline is extended to India.

It may be observed that India has lost the opportunity to grab an important energy deal but the strained relationship it has with Pakistan can make the deal detrimental for India’s energy interests. The growing terrorism inside Pakistan which the government finds unable to deal with, can time to time disrupt energy supply to Pakistan. Besides, any energy deal with Iran will not go down well with America which already has a bitter relationship with Iran. America has openly shown displeasure to Pakistan over energy deal with Iran.