Iran Weighs Arbitration against Pakistan
Iran's oil minister Bijan Zanganeh said February 4 that Pakistan has deferred Iranian gas imports for so long that the oil ministry in Tehran is considering referring Islamabad to the international arbitration court. His remarks came in the week that Islamabad was due to choose LNG suppliers during the month of April.
Based on its agreement, Pakistan should have started 22mn m3/d of Iranian gas imports in January 2015. Although Pakistani officials have been publicly saying that the south Asian country is keen to complete the pipeline, it has not been able to do so because of US pressure. Pakistan has not been able to build the pipeline on its soil due to lack of funding. Iran has already built 900 km of the pipeline on its territory while Pakistan still has to start work on the pipeline from its border.
Iran had promised to give $500mn credit to its neighbour, but could not do so due to sanctions. Pakistan seems to prefer importing LNG at world market prices rather than Iran’s piped gas under its contract. In the last few years, the government has been working aggressively to enhance Pakistan's LNG import infrastructure. There at two floating LNG imports terminals in operation and a few more are expected to be ready in a couple of years.
State importer Pakistan LNG's latest tender, for cargo deliveries this April, was due to have closed and been selected February 6 - but the company's website carried no results of the tender, nor any indication if it was cancelled. At its previous tender that closed January 1, for March 2018 deliveries, the company chose traders Vitol, Trafigura and BB Energy as the lowest-priced cargo offers.
Pakistan imported 3mn mt/yr LNG, mostly from Qatar in 2016 and its imports were expected to be 50% higher again last year. The country plans to import 30mn mt/yr of LNG by 2022.