Iran may resort to international arbitration against Pakistan due to its delay in constructing its part of the gas pipeline (Reuters)

Islamabad

- The News International, citing Pakistani officials, reported that Iran has extended the deadline for the joint gas pipeline project, or what is known as the “Peace Pipeline,” which is facing a setback by Pakistan, for 180 days, until next September.

The Pakistani newspaper reported that Tehran could resort to international arbitration in order to fine Islamabad $18 billion due to its repeated delays in constructing its part of the gas pipeline, if it does not make any progress in completing the project.

According to these officials, Iran had made an offer to send its legal and technical team to Pakistan to work on a profitable strategy in an attempt to complete the project and avoid arbitration.

This team was scheduled to arrive on January 21 to hold talks on implementing the project, but was unable to arrive due to recent tensions between the two countries, and is scheduled to arrive in the second week of this month.

In June 2011, Tehran announced the completion of its part of the joint gas pipeline project with Pakistan (Iranian press)

 He stays in place

The first discussions between Pakistan and Iran on the gas pipeline project began in 1994, and the initial agreement was signed in 1995, only between the two countries. Later, Iran proposed that the line reach India, and in 1999 it signed a preliminary agreement with New Delhi, and it was called the Iran-Pakistan Gas Pipeline, and India withdrew from the project in 2009.

In 2010, the United States asked Pakistan to abandon the project in exchange for assistance to build a liquefied natural gas terminal and import electricity from Tajikistan via Afghanistan.

Islamabad rejected the American offer, and signed a final agreement with Tehran on the project, at a meeting held in Ankara during March 2010. According to the agreement, each country was to build its own part of the pipeline by the end of 2014.

In June 2011, Iran announced that it had completed its part of the project, while Pakistani Finance announced in March 2012 that private investors had not shown sufficient interest.

In 2013, it was agreed that if Pakistan did not complete its part of the project by the end of 2014, it would have to pay a daily fine of $1 million to Iran until it was completed.

In March 2013, work on building the Pakistani part was officially launched by the presidents of the two countries, and an Iranian company was scheduled to work on the Pakistani part as well.

In February 2014, Shahid Khaqan Abbasi, the then Pakistani Minister of Oil and Natural Resources, informed Parliament that the gas pipeline project with Iran was no longer on the table, due to the sanctions imposed on Tehran.

There were hopes that the nuclear agreement between Washington and Tehran could give Pakistan freedom to implement the project, but Islamabad did not make any progress in this context.

Constant postponement

In February 2019, Iran sent its first notice to Pakistan to seek international arbitration not to extend the pipeline into Pakistani territory within the stipulated period. In late 2022, Iran asked Pakistan in its second notification to build part of the gas pipeline project on its territory until March 2024 or prepare to pay a fine of $18 billion.

In November 2023, the two countries decided to revive their cooperation on the project, and Pakistani media said the two countries were set to begin formal negotiations in the coming weeks. This was the result of the recent visit to Tehran by Pakistan's interim Energy Minister Muhammad Ali, where he said that his country reaffirmed its commitment to the project and expressed its urgent need for energy security.

The latest notification sent by Iran to Pakistan is the third, and it threatens to go to the French capital, where the international arbitration is based, an organization that does not recognize US sanctions on Iran.

Iran realizes that Pakistan has a very important role in giving it access to major energy consumers (Shutterstock)

Understanding, not tension

The expert in international relations and conflicts, Sayed Shabahat, said that he believes that the two parties are the softest neighbors to each other compared to their relations with other neighboring countries, given that both Iran and Pakistan are in a state of economic turmoil and the spread of terrorism.

Shobahat expects - in an interview with Al Jazeera Net - that Iran will continue to push Pakistan in a positive way without crossing any red lines, and the latter will also continue to try to hold meetings with regulatory and financial bodies to find a way to benefit from the Iranian energy market.

He added that Iran also realizes that Pakistan has a very important role in giving it access to major energy consumers such as India and China, and therefore Tehran will not want to displease Islamabad further.

For his part, political economy expert Osama Rizvi said that this is related to recent events between the two countries, and this was particularly important in this long-term cooperation between them.

Radwi said - in an interview with Al Jazeera Net - that he believes that energy, especially the pipeline, electricity transmission projects, etc., can provide a good basis for continuing good relations, and if reason is exercised, they will realize that it is beneficial to cooperate instead of skirmishes.

He added that he does not believe that Iran can bear this, given that it is the second most sanctioned country in the world, and that oil prices are not high these days, and the prices of living are rising in both countries.

Source: Al Jazeera