China to build US$2 bln Pakistan section of Iran pipeline

April 09, 2015 08:21
Pakistan has begun the ground work on a 700-kilometer section that will connect it to Iran's natural gas pipeline. Photo: WSJ

China will build the Pakistan section of a US$2 billion pipeline that will bring natural gas from Iran.

The project is expected to be signed during a visit by Chinese President Xi Jinping to Islamabad this month.

“We’re building it. The process has started,” Pakistani Petroleum Minister Shahid Khaqan Abbasi told The Wall Street Journal.

The pipeline will bring much-needed gas to Pakistan which suffers from a crippling electricity deficit because of a shortage of fuel for its power-generation plants.

Pakistan has been negotiating for months behind the scenes for China to build the Pakistani portion of the pipeline.

Tehran said that its 900-kilometer part of the pipeline from an Iranian gas field is complete and pressed Pakistan to build its half of the scheme.

Pakistan has not begun construction, however, because of threatened sanctions from the United States for trading with Iran over its nuclear program.

Islamabad has been trying to work around the sanctions by asking the Chinese to build but not connect it to the Iranian section.

But last week, Iran, the US and other countries struck a framework agreement on Iran's nuclear program, paving the way for the gradual lifting of restrictions on Tehran.

Among the first restrictions to be lifted are those relating to Iranian energy exports.

Pakistan is negotiating with China Petroleum Pipeline Bureau, a subsidiary of Chinese energy giant China National Petroleum Corporation, to build 700 kilometers 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.

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