Iran seeks changes to IPI pipeline pact
ISLAMABAD - The IPI project is in the doldrums. Iran has conveyed to Pakistan that it wants to revise the gas pricing formula after every year instead of previously agreement of revision of gas prices every two years.
After the new conditions from Iran, Pakistan has asked Iran to review its new conditions, including the pricing formula for the gas being provided to Pakistan under Iran-Pakistan-India (IPI) project and emphasised the need that Iran should accept the previously agreed upon gas price formula for this $7.4 billion project.
Referring to the proposed increase in the gas price, sources in the Petroleum Ministry said that Pakistan has written to the Iranian government seeking clarification about the new pricing formula and the proposed visit of Pakistan’s delegation to Iran in the third week of November has been cancelled so far.
Special Representative of the Ministry of Petroleum, Iran wrote a letter to Pakistan on November 9, 2008 in which Iran invited Pakistan’s delegation to visit Iran either on November 17 or 24 to sign the agreed issues on this project.
Pakistan and Iran previously finalized the draft of the Gas Sales Purchase Agreement (GSPA) and the two sides agreed to link the gas tariff with the Japan Crude Cocktail price.
Pakistan has again sent a proposal to Iran to accept the previous agreed gas price of 6.8 dollars per Million British Thermal Unit (MBTU).
Both the countries started this price at 3.13 dollars per MBTU and during a meeting between Pakistan’s delegation in its visit to Iran in September agreed to gas price at the rate of 6.8 dollars per MBTU but now Iran has proposed a new price of 10.80 dollars per MBTU.
Pakistan has also asked Iran to review this price as it is not affordable and it will increase the gas price for the consumers in Pakistan manifold.
Under the proposed agreement, IPI gas pipeline would bring natural gas from Iran’s South Pars gas field in the Persian Gulf to Pakistan and India.
In phase I, about 2.10 BCFD gas would be supplied that include 1.05 BCFD for Pakistan and 1.05 BCFD for India.
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