Last updated: March 11, 2013 10:32 pm

Iran and Pakistan launch pipeline project

Iranians work on a section of a gas pipeline linking Iran and Pakistan after the project was launched during a ceremony in the Iranian border city of Chah Bahar on March 11, 2013. The presidents of Iran and Pakistan inaugurated the construction of a much-delayed section of a $7.5 billion gas pipeline linking the two neighbours, Iranian media reported.©AFP

Iranians work on a section of a gas pipeline

Asif Ali Zardari and Mahmoud Ahmadi-Nejad, presidents of Pakistan and Iran, on Monday formally launched a $1.5bn pipeline project designed to provide Iranian gas to the energy-starved consumers of Pakistan.

In a live broadcast, Iran’s national television showed the two men shaking hands at an inauguration ceremony on the border, defying public warnings from the US State Department that the pipeline would “raise serious concerns” for violating US sanctions against Tehran over Iran’s nuclear programmes.

Large pipes painted with the Iranian and Pakistani flags could be seen in the background. Accompanied by patriotic songs, the broadcast showed workmen labouring at the construction site.

According to Iran, the pipeline from the South Pars gasfield has nearly been completed up to the border. Pakistan, an awkward but longstanding ally of the US in the region, says Iran has offered $500m in financing to help pay for the remaining 750km to be built on the Pakistan side of the border.

“The pipeline from Iran offers the shortest and quickest possible route for Pakistan to deal with our energy needs,” Qamar Zaman Kaira, Pakistan’s minister of information, told state-run Pakistan Television.

The US has pushed for an alternative gas route known as Tapi (Turkmenistan-Afghanistan-Pakistan-India), but Mr Kaira said that pipeline could not progress “until there is peace in Afghanistan”.

Western governments have warned Pakistan against assuming the US will tolerate the Iran-Pakistan pipeline indefinitely because of Washington’s dependence on Pakistani support as it pulls American troops and equipment out of neighbouring Afghanistan.

“In the coming years as the war in Afghanistan is scaled down, the US will have the option of opposing Pakistan’s energy imports from Iran,” said one senior western diplomat in Islamabad. “This project will ultimately have consequences for Pakistan.”

“If this project actually goes forward, we have serious concerns that sanctions would be triggered,” said Victoria Nuland, spokeswoman for the US state department. “However, we’ve heard this pipeline announced about 10 or 15 times before in the past, so we have to see what actually happens.”

Mr Ahmadi-Nejad said at the ceremony that the gas pipeline project was not related to the country’s nuclear programme.

“No foreign country [the US] can disrupt our [Iran-Pakistan] deep, historic and brotherly relations,” Mr Ahmadi-Nejad said. When Iran starts supplying gas to Pakistan, Pakistan would become Iran’s second customer after Turkey.

Pakistan is desperately short of gas for its power stations, and parts of the country have electricity from the grid for only a few hours each day.

If and when Iran starts supplying gas to Pakistan, Islamabad will be the Islamic Republic’s second customer for natural gas after Turkey.

Mr Zardari’s long-delayed launch of the pipeline project is nevertheless viewed by many Pakistanis as an attempt to win votes in a forthcoming general election rather than a genuine effort to make the pipeline a reality.

His government’s tenure is due to end in less than a week, and a caretaker administration will take charge to oversee parliamentary elections within three months.

“The president had his entire five-year term to turn this project in to reality,” said one disgruntled government official in Islamabad on Monday. “Why has he done so when his government’s tenure is barely five days from its end? Many people will be forced to see this inauguration as a gimmick for winning votes.”

The popularity of Mr Zardari’s ruling Pakistan People’s party has been badly damaged by power cuts over the past three years. Shortages of gas and electricity have crippled businesses and provoked street protests in summer and winter.

Asim Hussain, Mr Zardari’s chief adviser on oil and natural resources, told the Financial Times last December that Pakistan currently needed 8bn cubic feet a day of gas, but was producing only 4.2bn cf/d and had no facilities to import liquefied natural gas.

From the end of 2014, Pakistan would be obliged to pay Iran for gas under a “take or pay” contract linked to the pipeline project, regardless of whether it actually received any gas or not, Mr Hussain said.

Additional reporting by Victor Mallet in New Delhi

This article has been amended to clarify that Pakistan will be Iran’s second customer for natural gas after Turkey.

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