NEW YORK: Under a US $2 billion deal to be signed during the Chinese president’s visit to Islamabad later this month, China will build a pipeline to bring natural gas from Iran to Pakistan to help address the country’s acute energy shortage, The Wall Street Journal reported Thursday.
“We’re building it. The process has started,” the newspaper quoted Pakistani Petroleum Minister Shahid Khaqan Abbasi as saying.
The much-needed gas will help Pakistan fuel its power-generation plants and relieve it from crippling power shortages.
The Journal said the Chinese President Xi Jinping will offer support to a project first discussed in the 1990s as the “Peace Pipeline.”
Iran has said the 560-mile portion that runs to the Pakistan border is already complete, which only leaves $2 billion needed to build the Pakistani stretch.
The paper reports as much as 85 percent of the $1.5 billion project could be financed through Chinese loans. Iranian energy officials, meanwhile, are in Beijing discussing bilateral energy ties.
The Asian Development Bank in February said it was supporting efforts to help Pakistan build its first liquefied natural gas terminal with a $30 million loan. With the LNG facility, the bank said the Pakistan government would save about $1 billion per year on its fuel import bills.
The ADB in the past has lent its support to a multilateral natural gas pipeline that would stretch from Turkmenistan, an option favored by the U.S. government over the Iranian project.
The Journal cited energy officials in Islamabad as saying that U.S. sanctions on Iran had clouded the prospects of an Iranian gas pipeline.
A State Department official was quoted by the Journal as saying the U.S. government wouldn’t speculate on how any sanctions relief that comes as a result of a framework nuclear agreement with Iran could influence “any particular proposed business ventures.”
