ISLAMABAD-Pakistan has not used force majeure for the Iran Pakistan Pipeline project and is actively engaged with the stakeholders including United States and the United Nations (UN), for a waiver from sanctions, aiming to pave the way for the construction of the pipeline.
Pakistan had issued a Force Majeure notice to Iran 10 years ago ‘under the Gas Sales and Purchase Agreement (GSPA), which Iran did not accept, and instead granted two five-year extensions to meet the obligations in the pipeline project, State Minister for Petroleum Division Dr Musadiq Malik said in a press conference here. The second five-year waiver granted by Tehran is expiring in March 2024, he said.
The minister categorically denied that Pakistan has issued any force majeure notice recently to Iran for suspending work on the multibillion dollar gas pipeline project. “We don’t want to go into litigation with Iran,” he added.
Iran had extended time to meet the obligations in the IP project till March 2024, the minister informed. Pakistan had been engaged with Iranian side for a positive solution and also in contact with international forums for the waivers of sanctions for import of energy from Iran, he further added.
Musadik Malik said that work on the IP project was stalled due to US sanctions on Tehran and the non issuance of waiver by the American administration for import of petroleum products from Iran. The US administration did not grant waivers to Pakistan to import petroleum products from Iran like it had given to China, India, Japan, South Korea and some other countries, he elaborated. The project activities would resume once the sanction was removed or waiver granted, he added.
He said that Iran was facing two types of sanctions from US and UN. He said that US sanctions were strict and therefore, Pakistan did not want to face sanctions. Pakistan is now actively engaged with Iran and all other stakeholders to find out the right way, he maintained. The state minister said that Pakistan was engaged with US through diplomatic channels to seek a waiver from sanctions for the gas project.
The minister also denied the assumption that Pakistan is bound to pay $1 million per day to Iran from January 1, 2015 for failing to complete the pipeline’s construction on its territory and claimed that there was no penalty in the GSPA as it was based at take and pay condition. However, he insisted that in case Pakistan failed in meeting the contractual obligations then Iran would determine the penalty amount through legal court of law. While talking on import of Russian oil, the minister said that it has yet to have a big impact on the consumer and claimed that benefit will be visible in the near future. Musadik further claimed during his tenure, 164 mmcfd of gas was added to the system, resulting in significant savings from LNG usage. Within the next six months, an additional 132 MMcfd of gas will be added to the system.