Pakistan’s Plan to Complete Iran Gas Project Without US Sanctions

Pakistan is making efforts to revive the long-delayed Iran-Pakistan (IP) gas pipeline project while avoiding US sanctions and a hefty billion penalty. The project was under scrutiny Due to US Sanctions against Iran. But officials are exploring a new ways to move forward.

Under this new plan, Pakistan might not buy gas directly from Iran. they can involve a third party or a powerful nation to act as an intermediary, allowing them to bypass US Sanctions. Iran is also supporting the  idea as they want to  see this project succeed.

The project had been delayed so many times. Mostly due to concerns about the repercussions of engaging with Iran under US sanctions. Pakistan has been cautious about proceeding to avoid being penalized. While Iran contends that gas trade and pipeline construction are not subject to sanctions, the situation has remained in limbo for years.

In a recent development, Iran formally requested Pakistan to complete a portion of the pipeline within its territory by February-March 2024, or face a billion penalty.

The Gas Sales Purchase Agreement (GSPA) was signed in 2009, with a 25-year term, but the project has made limited progress. The initial plan was for Pakistan to construct a 781-kilometer pipeline from the Iranian border to Nawabshah.

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Under the original agreement, Pakistan was liable to pay Iran million per day starting from January 1, 2015, as a penalty for the project’s delays. ​
To navigate these challenges, Pakistan is now considering involving a third party or a nation willing to overlook US sanctions. This alternative can ensure that the process is completed and produce a stable gas supply.

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The Pakistani government also seeks U.S. sanctions. authorities and clarify the possible consequences of the implementation of the project. By restructuring the IP gas pipeline project and involving a third party, Pakistan hopes to unlock the long-awaited energy benefits while avoiding international sanctions