One year after deciding to proceed with a gas pipeline project without India, Iran and Pakistan signed the last of a series of agreements committing Iran to supply gas to Pakistan from 2014.
The agreements have been driven by Pakistan’s growing domestic supply shortages of gas, which are having increasingly serious repercussions on power plants, some of which are reverting to burning expensive fuel oil.
Pakistan estimates that gas from Iran could support supplies for 5,000MW of generation capacity. However, the slow pace of development of Iran’s South Pars field, coupled with funding and technology shortages in the country’s energy sector and its growing domestic demand for gas, could impede the project schedule.
Pakistan plans to launch a feasibility study on its pipeline section with a view to completing construction by 2014, although reliance on uncertain internal financing sources and a volatile security situation in Baluchistan are formidable hurdles.