“We will continue to enforce our sanctions against Iran,” Miller stated in response to a question about Pakistan’s efforts to complete the pipeline and secure a US sanctions waiver. “We also advise any country considering business deals with Iran to be aware of the potential consequences of such actions,” he added.
Miller emphasized that while the US is committed to assisting Pakistan in addressing its energy crisis, Washington remains firm in its stance against the pipeline project. “Energy security in Pakistan is a priority for the United States, and we continue to engage with the Pakistani government on this matter,” he said.
The pipeline agreement, signed in 2010, was designed to supply between 750 million and 1 billion cubic feet of natural gas per day for 25 years, sourced from Iran’s South Pars gas field. The pipeline was planned to cover a distance of 1,900 kilometers (1,180 miles), with 1,150 kilometers within Iran and 781 kilometers in Pakistan.
Iran claims to have invested $2 billion in constructing its segment of the pipeline, making it ready for gas export. However, Pakistan has yet to begin construction, citing international sanctions on Iran as the reason for the delay. Shortly after the deal, Pakistan announced that the project was temporarily shelved due to these sanctions.
Iran’s then-Oil Minister responded by urging Pakistan to fulfill its obligations, noting that Tehran had honored its commitments and expected the same from Islamabad.
In 2014, Pakistan requested a 10-year extension to complete the pipeline, a deadline that expires in September this year. Should Pakistan fail to meet this deadline, Iran could pursue legal action, potentially leading to a fine of up to $18 billion for Pakistan’s failure to uphold its end of the agreement.
Facing the prospect of such penalties, Pakistan’s government earlier this year gave the green light to commence the construction of an 80-kilometer segment of the pipeline. In March, Pakistan officially announced its intent to seek a waiver from US sanctions.
Washington’s support is crucial for Pakistan, as the country seeks approval from the IMF executive board for a 37-month, $7 billion bailout program agreed upon in July.
Pakistan, heavily reliant on natural gas for domestic and industrial use, urgently needs an affordable energy source as its own reserves deplete, and LNG contracts become increasingly expensive amidst soaring inflation.
Iran, which holds the world’s second-largest gas reserves after Russia according to BP’s Statistical Review of World Energy, has struggled to develop its gas export capacity due to Western sanctions, internal political instability, and construction delays.
Originally, the Pakistan-Iran pipeline project also envisioned an extension to India, but Delhi later withdrew from the agreement.
US Assistant Secretary of State Donald Lu, during a Congressional hearing earlier this year, voiced strong support for preventing the pipeline’s completion. “We are working toward that goal,” Lu stated, affirming the US government’s position.