ISLAMABAD: Pakistan has informed Iran of its intention to shelve the long-delayed Iran-Pakistan (IP) gas pipeline project under an out-of-court settlement arrangement, while offering to revive the project if a waiver from United States sanctions can be secured, sources said on Monday.
The multibillion-dollar pipeline project has remained stalled since 2014 due to US sanctions on Iran, despite Tehran granting multiple deadline extensions. Iran has also initiated legal proceedings against Pakistan over delays in executing the agreement.
Sources said Iran has now agreed to extend the gas sale agreement for another 10 years to revive the project. However, Pakistan has conveyed that it would only proceed if Washington grants a sanctions waiver, along with revised terms including lower gas volumes and reduced prices.
Pakistan has cited weak domestic gas demand, higher IP gas prices compared to LNG, and continued pressure from the United States as key reasons for shelving the project. Officials noted that Pakistan is already facing surplus gas due to low demand and scheduled LNG imports from Qatar, including 24 cargoes in 2026.
Iran maintains that it has completed its portion of the pipeline, while Pakistan has yet to begin construction. Islamabad has previously sought a US waiver for the project, which was denied, with Washington reiterating strict enforcement of sanctions against Tehran.
Pakistan currently relies on LNG imports, mainly from Qatar, but surplus supply has prompted the government to introduce measures to boost gas consumption. These include incentives for lower-cost electricity to agriculture and industry, and lifting a decade-long ban on new gas connections, with new consumers to be supplied gas at LNG-linked prices.