China plans to build a pipeline to transport natural gas from Iran to Pakistan in a move to alleviate the crippling burden of electricity shortage in Pakistan, a report said.
A deal is likely to be signed during the Chinese president’s visit to Islamabad this month, Pakistani officials were quoted as saying in the Tehran Times report.
Pakistan has been negotiating for months for China to build the Pakistani portion of the pipeline, which will cost up to $2 billion, according to the report.
“We’re building it,” Pakistani Petroleum Minister Shahid Khaqan Abbasi told The Wall Street Journal. “The process has started.”
Dubbed the “Peace Pipeline,” its 900-kilometre part from an Iranian gas field is complete and Pakistan is under pressure to complete its part of the scheme.
Pakistan hasn’t begun construction in light of threatened US sanctions for trading with Iran, the report said.
“This [Iran nuclear agreement] will help us in getting a few things which were coming into the way of the Iran-Pakistan gas pipeline to be cleared and we will move forward,” Pakistan’s ambassador to Iran, Noor Muhammad Jadmani, was quoted in the report, which cited the official Iranian news agency Irna.
Pakistan is negotiating with China Petroleum Pipeline Bureau, a subsidiary of Chinese energy giant China National Petroleum Corporation, to build 700 kilometres of pipeline from the western Pakistani port of Gwadar to Nawabshah in the southern province of Sindh, where it will connect to Pakistan’s existing gas-distribution pipeline network.
The cost would be $1.5 billion to $1.8 billion for the pipeline, or $2 billion if an optional Liquefied Natural Gas terminal at Gwadar is included in the scheme. Under the deal, 85 per cent of the financing will be provided by a Chinese loan, with Pakistan coming up with the rest.
The remaining 50 miles (80 kilometres) will be built by Pakistan. The pipeline, which would take two years to build, would eventually supply Pakistan with enough gas to fuel 4,500 M of electricity generation.