The Pakistani government is officially abandoning the $2 billion Gwadar-Nawabshah (GN) LNG pipeline project. The project was an alternative to the original Iran Pakistan (IP) gas pipeline.
Due to US sanctions on Iran, the LNG pipeline project was proposed. With its cancellation, Pakistan might need to look at other options for its energy needs.
Will Affect China The Most
Pakistan and China had signed the agreement for the LNG pipeline on April 20th 2015. Pakistan had assured Iran that the pipeline will be linked with the Iran border after the US sanctions are lifted.
Alternative to Iran-Pakistan Gas Pipeline
Originally, under the IP project agreement, Pakistan was to receive gas supply from January 2015. Failure to comply would mean that Pakistan had to pay $3 million daily to Iran. However Iran chose not to sue Pakistan (despite having the legal upper hand to do so) and agreed on the alternative GN LNG project.
The decision to shelf the GN pipeline was made in a high level meeting, chaired by Prime Minister Nawaz Sharif. The Ministry of Petroleum was ordered to stop the GN project immediately and commence work on a new LNG terminal in Port Qasim, Karachi.
Pressure from US
The US had been pressuring Pakistan to abandon the IP project and sign the LNG project deal. Pakistan agreed and signed a contract with Qatar. It should be noted that majority shareholders in the Qatar deal are US, European and Japanese companies.
The reason cited for abandoning the project was its high cost, despite getting approved by the Executive Committee of National Economic Council (ECNEC) after detailed cost examination. Exim Bank of China was to fund this project.
Via Pakistan Today