Identifier
Created
Classification
Origin
08ISLAMABAD139
2008-01-10 01:30:00
CONFIDENTIAL
Embassy Islamabad
Cable title:
GOP APPROVES SIGNING OF IRAN-PAKISTAN PIPELINE
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C O N F I D E N T I A L ISLAMABAD 000139
SIPDIS
SIPDIS
E.O. 12958: DECL: 01/09/2013
TAGS: ENRG ECON EFIN EINV PREL PK
SUBJECT: GOP APPROVES SIGNING OF IRAN-PAKISTAN PIPELINE
REFS: A) 07 ISLAMABAD 4578, B) 07 ISLAMABAD 4274, C) 07 ISLAMABAD
2593, D) 07 ISLAMABAD 1059, E) 07 ISLAMABAD 543
C O N F I D E N T I A L ISLAMABAD 000139
SIPDIS
SIPDIS
E.O. 12958: DECL: 01/09/2013
TAGS: ENRG ECON EFIN EINV PREL PK
SUBJECT: GOP APPROVES SIGNING OF IRAN-PAKISTAN PIPELINE
REFS: A) 07 ISLAMABAD 4578, B) 07 ISLAMABAD 4274, C) 07 ISLAMABAD
2593, D) 07 ISLAMABAD 1059, E) 07 ISLAMABAD 543
1. (U) This is an action request. Please see para five.
Pakistan approves signing of Iran-Pakistan pipeline
-------------- --------------
2. (SBU) The GOP approved the gas sale purchase agreement with Iran
on January 8, which paves the way for signing the Iran-Pakistan
pipeline agreement. The agreement is set to be signed in late
January, but Econoff was told that no funding source has yet been
identified. Both countries agreed to review the gas pricing formula
whenever the relationship between the Japan LNG and Japan crude oil
mix changes. Pakistan's request to Iran for a 1.05 billion cubic
feet per day gas allocation was also approved January 8. Estimated
cost of the project using a 36 inch pipeline without India drops from
$7.2 billion to approximately $2.5 billion. India, however, may opt
to participate in the project at any time. The GOP estimates that
the pipeline will be operational in five years.
Comment
--------------
3. (C) Pakistan's decision to go ahead with the Iranian pipeline is
not without ramifications, which the GOP is well aware. This issue
has been raised many times by U.S. officials with their Pakistani
counterparts (reftels). Musharraf's statement on the Iranian Foreign
Minister's January 4 visit that he would not tolerate any "external
pressure to abandon the project would be tolerated." Pakistan has
few good options for finding additional energy supplies. While it
does have a good gas exploration-discovery ratio, it would be
difficult to find enough domestic reserves to replicate the 1.05
billion cubic feet that the Iranians are purportedly offering.
4. (C) Comment continued: In addition, as energy and power
shortages in the aftermath of the Bhutto assassination have shown,
Pakistan cannot satisfy its current energy needs (septel) and any
significant disruption of supply has serious consequences. While
Pakistan says that it has not yet identified a funding source, we
have heard that Gazprom is interested. We will wait to see whether
this project, once signed, actually comes to fruition. End comment.
Action request
--------------
5. (C) Action request: Post recognizes the ramifications for
U.S.-Pakistan policy of Pakistan's decision, particularly in the
absence of Indian participation. We would appreciate an analysis of
the sanctions implications for both the GOP and any private Pakistani
or other entities that might eventually participate in this project.
In addition, we would appreciate any Washington agency suggestions on
what the U.S. can do in the short term to mitigate Pakistan's energy
woes. We also recommend that Washington prepare press guidance and
brief the Hill on Pakistan's motivations for concluding this
agreement. End action request.
PATTERSON
SIPDIS
SIPDIS
E.O. 12958: DECL: 01/09/2013
TAGS: ENRG ECON EFIN EINV PREL PK
SUBJECT: GOP APPROVES SIGNING OF IRAN-PAKISTAN PIPELINE
REFS: A) 07 ISLAMABAD 4578, B) 07 ISLAMABAD 4274, C) 07 ISLAMABAD
2593, D) 07 ISLAMABAD 1059, E) 07 ISLAMABAD 543
1. (U) This is an action request. Please see para five.
Pakistan approves signing of Iran-Pakistan pipeline
-------------- --------------
2. (SBU) The GOP approved the gas sale purchase agreement with Iran
on January 8, which paves the way for signing the Iran-Pakistan
pipeline agreement. The agreement is set to be signed in late
January, but Econoff was told that no funding source has yet been
identified. Both countries agreed to review the gas pricing formula
whenever the relationship between the Japan LNG and Japan crude oil
mix changes. Pakistan's request to Iran for a 1.05 billion cubic
feet per day gas allocation was also approved January 8. Estimated
cost of the project using a 36 inch pipeline without India drops from
$7.2 billion to approximately $2.5 billion. India, however, may opt
to participate in the project at any time. The GOP estimates that
the pipeline will be operational in five years.
Comment
--------------
3. (C) Pakistan's decision to go ahead with the Iranian pipeline is
not without ramifications, which the GOP is well aware. This issue
has been raised many times by U.S. officials with their Pakistani
counterparts (reftels). Musharraf's statement on the Iranian Foreign
Minister's January 4 visit that he would not tolerate any "external
pressure to abandon the project would be tolerated." Pakistan has
few good options for finding additional energy supplies. While it
does have a good gas exploration-discovery ratio, it would be
difficult to find enough domestic reserves to replicate the 1.05
billion cubic feet that the Iranians are purportedly offering.
4. (C) Comment continued: In addition, as energy and power
shortages in the aftermath of the Bhutto assassination have shown,
Pakistan cannot satisfy its current energy needs (septel) and any
significant disruption of supply has serious consequences. While
Pakistan says that it has not yet identified a funding source, we
have heard that Gazprom is interested. We will wait to see whether
this project, once signed, actually comes to fruition. End comment.
Action request
--------------
5. (C) Action request: Post recognizes the ramifications for
U.S.-Pakistan policy of Pakistan's decision, particularly in the
absence of Indian participation. We would appreciate an analysis of
the sanctions implications for both the GOP and any private Pakistani
or other entities that might eventually participate in this project.
In addition, we would appreciate any Washington agency suggestions on
what the U.S. can do in the short term to mitigate Pakistan's energy
woes. We also recommend that Washington prepare press guidance and
brief the Hill on Pakistan's motivations for concluding this
agreement. End action request.
PATTERSON