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Iran and Pakistan sign gas export agreement

Iran and Pakistan formally signed yesterday an export deal which commits the Islamic republic to supplying its eastern neighbour with natural gas from 2014.

The contract is the latest step in completing a multi-billion dollar gas pipeline between Iran and Pakistan within the next four years.

“This is a happy day,” Iran’s Deputy Oil Minister Javad Ouji told reporters at the contract signing ceremony in Tehran. “After decades of negotiations, we are witnessing today the execution of the agreement… to export more than 21 million cubic metres of natural gas daily from 2014 to Pakistan,” he added.

He said that from today, Iran will start building the next 300-kilometre leg of the pipeline from the southeastern city of Iranshahr to the Pakistani border, through the Iranian port of Chabahar.

Iran has already constructed 907km of the pipeline between Asalooyeh, in southern Iran, and Iranshahr, which will carry natural gas from Iran’s giant South Pars field. Pakistan’s Deputy Energy Minister Kamran Lashari, who was present at the signing ceremony, said Islamabad will conduct a one-year feasibility study for building its section of the pipeline.

It will then “take three years for constructing the 700km pipeline” from the Iranian border to the Pakistani city of Nawabshah, he added. The pipeline was originally planned between Iran, Pakistan and India, but the latter pulled out of the project last year. Pakistan plans to use the gas for its power sector.

India left out. Iran and Pakistan ink $7.5 billion Pipeline deal

India left out. Iran and Pakistan ink $7.5 billion Pipeline deal

ISLAMABAD — Pakistan and Iran on Friday signed a “sovereign guarantee” agreement paving the way for the completion of a 7.5-billion-dollar gas pipeline project within the next four years.

The 900-kilometre (560-mile) pipeline will be between Asalooyeh, in southern Iran, and Iranshahr, near the border with Pakistan, and will carry natural gas from Iran’s South Pars field.

Pakistan petroleum minister Syed Naveed Qamar told reporters after a signing ceremony in Islamabad that originally the pipeline was planned between Iran, Pakistan and India, but the latter withdrew from the project last year.
“I am extremely pleased that after 17 long years this project is finally starting. It would help us generate energy for our industrial growth,” Qamar said of the Gas Sale and Purchase Agreement (GSPA) between the two countries.
Qamar added that “Iran had assured us that they would complete the project between two-and-half to three years, ahead of schedule.”

The imported natural gas — whose volume is estimated at nearly 20 percent of Pakistan?s current gas production — will be dedicated to the power sector.

Electricity generation through gas would result in “significant” annual savings when compared with other fuels, a petroleum ministry statement said.

Supply is contracted for a period of 25 years, the statement said, renewable for another five years.
“While all other CPs (Conditions Precedent) of the GSPA are completed, the project is now ready to enter into its implementation phase,” the ministry statement said.

“As per current project implementation schedule, the first gas flow is targeted by end 2014.
“The capital cost for the Pakistan section is estimated at 1.65 billion dollars.”

China’s Pakistan Corridor

April 30, 2010 Leave a comment

Balochistan is treacherous territory for many, but Beijing keeps buying its way in.

In the Pakistani province of Balochistan, South Asia and central Asia bleed into the Middle East. Bordered by Afghanistan, Iran and the Persian Gulf, and well endowed with oil, gas, copper, gold and coal reserves, Balochistan is a rich prize that should have foreign investors battering at the gates. But for a half-century it has been the exclusive playground of the Pakistani government and its state-owned Chinese partners. China would prefer it to stay that way.

China is Pakistan’s oldest military and political ally, but in the last two decades it is the economic component of the alliance that has taken center stage. Pakistan, and in particular Balochistan, is China’s physical link to its sizable investments in Iranian gas, Afghan hydropower and Gulf oil. Explains Andrew Small, a fellow at the German Marshall Fund, the Sino-Pak relationship “matters more now, because of India’s economic growth. Pakistan being a trade and energy corridor means that possible pipelines and projects [in Pakistan] have a strategic significance beyond the specific investments.” Chinese control of Pakistan’s commodities corridor can “bind India down in South Asia, restricting its capacity to operate elsewhere.”

Chinese companies have poured at least $15 billion into Baloch projects: an oil refinery, copper and zinc mines and a deepwater port at Gwadar, in the Gulf of Oman. “They wanted Gwadar to be another Dubai,” says Khurram Abbas, the port’s managing director, “to capture the transit trade with countries that are landlocked, like Afghanistan, and to encourage transshipment trade from the Persian Gulf to East Africa.”

China’s Tianjin Zhongbei Harbor Engineering has invested $200 million to build the first three berths and plans to invest a total of $1.6 billion to expand the port in the future. But business at Gwadar has been slow. Though the three berths have the capacity to handle $2 billion worth of cargo a year, the port saw only $700 million in 2009. “The challenge,” says Abbas, “is that Gwadar is not yet linked to the rest of the country. The government was supposed to provide road connectivity. Without roads there can be no commercial activity [in Balochistan]. And we need commercial activity, investors to set up factories around Gwadar, to get cargo for the port.”

China is taking matters into its own hands, starting to build a highway from Gwadar to the capital of Balochistan, Quetta, on the Afghan border, where it will connect to Pakistan’s national highway network, and from there to the Karakoram Highway that leads into China. China’s Harbor Engineering Corps is also working on a new airport at Gwadar, due to open in 2013.

Infrastructure is not the only challenge that Chinese investors in Balochistan face. The province is a key battleground in the wars currently threatening Pakistan. Quetta is rumored to be hiding wanted leaders from the Afghan Taliban. Small towns in the Baloch heartland, meanwhile, are a launchpad for a decades-old separatist movement that capitalizes on populist resentment of federal agencies and foreign investment.

Chinese firms can usually weather these threats. Explains the German Marshall Fund’s Small, “They are less concerned about security than the U.S. because they have faith in the Pakistani military’s ability to look out for their interests, a level of faith that Chinese workers will get privileged levels of protection even amidst destabilizing [political] circumstances.” Unsaid: China is willing to play in the bribery culture traditional to the area.

Moreover, China recruits local figures as managers. Muhammad Sanjrani, the managing director of China’s Saindak copper mine in Chagai, Balochistan, is also the head of the local tribe, with historic control of the Chagai region, and has worked to sell the project to the populace.

Beijing is willing to play hardball to protect its position in Balochistan. That’s a lesson learned the hard way for Tethyan Copper, a joint venture between Canada’s Barrick Gold ( ABX – news – people ) and Chile’s Antofagasta. In 2006 Tethyan signed a deal to survey, and then develop, the Reko Diq reserve in Balochistan, estimated to hold $70 billion in copper and gold.