Overview

The governments of Iran and Pakistan are building a natural gas pipeline connecting the two countries, with gas flowing from Iran to Pakistan.

The pipeline will run from Iran’s Assaluyeh Energy Zone via Baluchistan in Pakistan to Sindh, transporting gas from Iran’s South Pars offshore field.

Both countries have said that sanctions imposed on Iran will not prevent the completion of the pipeline, following suggestions that the US government had offered Pakistan cheaper gas if it stopped the development.

However, the project has run into funding difficulties, with Commercial Bank of China withdrawing its loan to Pakistan for the project. Iran is now seeking to help fund Pakistan’s part of the project, by loaning it $250m, with a further $250m coming from Iranian banks.

Iran has already completed the pipeline running through its country and is eager for Pakistan to finish its pipeline, as once completed, it will transport 21.5 billion cubic metres a year of South Pars gas, which can later be raised to 55 billion cubic metres. Although the project is scheduled for a 2014 completion, it is likely to be delayed until 2016 due to the problems Pakistan is facing with funding.