Iran slams Pakistan over gas contract

Iranian oil minister Bijan Zanganeh on Monday slammed Pakistan’s lack of certainty within its natural gas industry as Tehran is asked to join Hungary’s oil firm MOL in the development of Pakistani gas projects.

According to the ministry’s news service, Shana, Zanganeh met Monday with Hungarian finance minister Mihály Varga to discuss potential cooperation both in Iran and abroad, particularly in Pakistan, Kallanish Energy learns.

Zanganeh said Tehran would be ready to cooperate in the development of gas projects but “our concern for joining Pakistan’s gas sector is that this country offers no clear answer to how it intends to honor a binding contract for gas export it has signed with Iran.”

Islamabad and Tehran agreed to build an export gas pipeline connecting southern Iran to Pakistan. The 2,775-kilometer (1,724-mile) pipeline known as the Iran-Pakistan or Peace Pipeline is half built. Iran has reportedly finished construction on its side, while Pakistan has failed to build the remaining infrastructure.

The estimated $7.5 billion onshore pipeline will have capacity to carry some 40 billion cubic meters per year (Bcm/y) of Iranian gas to Pakistan, but only 8.7 Bcm/y have been contracted. The line was originally expected to come online in December.

Shana said MOL, which has operated in Pakistan for years, is willing to operate in certain areas in Iran, while gas projects in Pakistan and oil swaps in the Caspian region are some of the projects “favored” by the company.

Without further details, Zanganeh noted Hungarian firms have also signalled willingness to buy Iranian oil. To date, MOL has purchased one oil cargo from Iran.