Iran
and
Pakistan
signed a deal in
Turkey
on Tuesday paving the way for construction to start on a much-delayed
natural-gas pipeline connecting the two nations in a move which has been
opposed by
Washington
as undermining sanctions efforts against
Tehran
.
Pakistan
has argued the pipeline, which will connect
Iran
's
South Pars gas field with
Pakistan
's
Baluchistan
and Sindh provinces, is crucial to averting a growing energy crisis
that is already causing severe electricity shortages.
(This story and related background material will be
available on The Wall Street Journal Web site, WSJ.com.)
"It's
in our legitimate economic interests," said Abdul Basit, a
Pakistan
foreign ministry spokesman. Construction on the pipeline should begin this year
and be operational by 2014, he said.
Iran
and
Pakistan
signed an initial pact in June last year and reached agreement on pricing in
September. Under the terms of the final deal signed Tuesday,
Iran
will
supply 750 million cubic feet a day of gas to
Pakistan
for
25 years.
The pipeline has been on the drawing board since the mid-1990s, when
Iran
and
India
signed a deal to transport gas through
Pakistan
.
Dubbed the "Peace Pipeline" because of hopes it would lead to a
detente between rivals
India
and
Pakistan
, the
$7 billion, 2,700-kilometer pipeline project was stalled as the two nations
almost went to war in 2001.
India
dropped out last year amid continued security concerns in
Pakistan
's
Baluchistan
province, home to a militant Islamist separatist movement, and over
disagreements between the parties on pricing.
The scaled-down project could still face further delays. Militants blew up
another gas pipeline in
Baluchistan
in
August, highlighting the difficulties
Pakistan
's
government faces in operating in the poor but resource-rich province. Some
details of the Iran-Pakistan pipeline also remain unclear, including how much
it will cost and how the countries will finance the project given
U.S.
opposition.
The
U.S.
held
out the promise of a civilian nuclear agreement with
India
,
enacted in 2008, as a carrot to stop
India
from
pursuing the pipeline, said Moeed Yusuf, a
South Asia
adviser to the United States Institute of Peace, a Washington-based think tank.
The U.S. Congress is unwilling to offer a similar deal to
Pakistan
, a
nuclear power which is battling a domestic al Qaeda-linked Islamist insurgency,
U.S.
and
Pakistani officials say.
Washington
had
hoped to push another delayed pipeline linking
Turkmenistan
,
Afghanistan
,
Pakistan
and
India
as an
alternative. But fighting in
Afghanistan
has
kept that project on hold.
"Clearly the Americans are not happy about it. They don't want
Iran
getting this opening. But at this point they're not in a position to offer
anything that will stop
Pakistan
,"
Yusuf said.
The
U.S.
imposes sanctions on any entity that invests more than $20 million per year in
Iran
's
energy sector.
Pakistan
relies on natural gas for about half of its energy needs, but domestic supplies
are declining, forcing the country to import more. Poor infrastructure,
including limited ability to handle liquefied natural gas imports, make
pipelined gas more attractive.
With gas shortages, the country's total power generating capacity is currently
about 4,000 megawatts short of demand, causing rolling electricity blackouts
and hurting businesses.
The Asian Development Bank is working with
Pakistan
on a
report, set for release in June, on how to restructure
Pakistan
's
energy sector to improve efficiency and stop common problems such as power
theft.