Iran is planning to build an oil refinery in neighbouring Pakistan to alleviate the impact of international sanctions on its oil industry.

Pakistan’s adviser to prime minister of petroleum and natural resources, Asim Hussain, said a 400,000 barrel-a-day (b/d) facility would be built in the southwestern city of Gwadar, according to Tehran-based Fars News Agency (FNA).

The refinery will allow Iran to exchange oil products from the refinery for goods such as food, allowing Iran to bypass sanctions against hydrocarbons produced in Iran.

Pakistan President Asif Ali Zardari is expected to soon visit Iran to finalise an agreement to move ahead with the megaproject.

At the same time, Iran expects to complete work on the $1.5bn Pakistan section of the Iran-Pakistan gas pipeline by the end of 2014, FNS said.

The 750-kilometres section will have the capacity to supply Pakistan with an initial 750 cubic feet a day (cf/d) of gas from Iran’s South Pars field.