Identifier
Created
Classification
Origin
08ISLAMABAD3737
2008-12-01 13:18:00
CONFIDENTIAL
Embassy Islamabad
Cable title:
IRAN GAS PIPELINE PROJECT "PUT ON ICE" BY GOP
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C O N F I D E N T I A L ISLAMABAD 003737
SENSITIVE
SIPDIS
E.O. 12958: DECL: 12/01/2018
TAGS: ECON ETRD EAID EFIN ENGY EPET ELTN PK IN
SUBJECT: IRAN GAS PIPELINE PROJECT "PUT ON ICE" BY GOP
Classified by: Ambassador PATTERSON for reasons 1.4 (b) and (d)
C O N F I D E N T I A L ISLAMABAD 003737
SENSITIVE
SIPDIS
E.O. 12958: DECL: 12/01/2018
TAGS: ECON ETRD EAID EFIN ENGY EPET ELTN PK IN
SUBJECT: IRAN GAS PIPELINE PROJECT "PUT ON ICE" BY GOP
Classified by: Ambassador PATTERSON for reasons 1.4 (b) and (d)
1. (C) Summary: Local media reports that Iran has increased the
proposed price for natural gas under the Iran pipeline which makes
the project unfeasible for the Government of Pakistan. Officials at
the Ministry of Petroleum and Natural Resources confirm that unless
directed to pursue the Iran pipeline by the political leadership, the
functional officers at the Ministry are shelving the Iran pipeline
proposal due to the new Iranian price proposal of USD 7-8 and will
pursue exploration of domestic natural gas resources instead. End
Summary.
2. (U) On November 29, local media reported that the multi-billion
dollars Iran-Pakistan-India (IPI) gas pipeline line project is
"likely to be put on ice" as Iran has doubled the gas price, linking
it with 80 percent of the global crude oil price. According to media
reports, Iran's new asking price is USD 7-8 per Million British
Thermal Unit (MBTU),based on USD 50 per barrel of crude, and USD
14-16 per MBTU if crude oil prices go up to USD 100 per barrel.
3. (C) Taimur Asmat Osman, Joint Secretary for Development, Ministry
of Petroleum and Natural Resources told EconOff on December 1, that
based on internal discussions within the Ministry, officials are now
convinced that Iran is not serious in signing a gas deal with
Pakistan. Osman confided that on a recent trip to India, he spoke
with his Indian government counterpart tasked with the IPI portfolio
who also shares the same views. Osman further maintained that at the
functional levels of the Ministry, they will not waste any more time
on this project unless the political leadership decides to push it
further.
4. (SBU) Progress was made on the pipeline during the reign of the
caretaker government when Iran and Pakistan agreed to link the
pipeline gas tariff with a formula for 40 percent price of global
crude oil. However, at the time, crude price in the international
market was USD 100 per barrel. Per the new demands, Iran now wants
to link the pipeline gas price with a formula for 80 percent of
global crude oil price which makes the project economically
unfeasible for Pakistan. According to domestic gas sources, the
locally produced natural gas price is USD 3.5 per MBTU.
5. (SBU) The Ministry of Petroleum and Natural Resources is expected
to seek further political instruction and guidelines before resuming
dialogue with Iran on the gas pricing issue. The Government is
expected to accelerate exploration of indigenous natural gas
resources which could be potentially vast.
PATTERSON
SENSITIVE
SIPDIS
E.O. 12958: DECL: 12/01/2018
TAGS: ECON ETRD EAID EFIN ENGY EPET ELTN PK IN
SUBJECT: IRAN GAS PIPELINE PROJECT "PUT ON ICE" BY GOP
Classified by: Ambassador PATTERSON for reasons 1.4 (b) and (d)
1. (C) Summary: Local media reports that Iran has increased the
proposed price for natural gas under the Iran pipeline which makes
the project unfeasible for the Government of Pakistan. Officials at
the Ministry of Petroleum and Natural Resources confirm that unless
directed to pursue the Iran pipeline by the political leadership, the
functional officers at the Ministry are shelving the Iran pipeline
proposal due to the new Iranian price proposal of USD 7-8 and will
pursue exploration of domestic natural gas resources instead. End
Summary.
2. (U) On November 29, local media reported that the multi-billion
dollars Iran-Pakistan-India (IPI) gas pipeline line project is
"likely to be put on ice" as Iran has doubled the gas price, linking
it with 80 percent of the global crude oil price. According to media
reports, Iran's new asking price is USD 7-8 per Million British
Thermal Unit (MBTU),based on USD 50 per barrel of crude, and USD
14-16 per MBTU if crude oil prices go up to USD 100 per barrel.
3. (C) Taimur Asmat Osman, Joint Secretary for Development, Ministry
of Petroleum and Natural Resources told EconOff on December 1, that
based on internal discussions within the Ministry, officials are now
convinced that Iran is not serious in signing a gas deal with
Pakistan. Osman confided that on a recent trip to India, he spoke
with his Indian government counterpart tasked with the IPI portfolio
who also shares the same views. Osman further maintained that at the
functional levels of the Ministry, they will not waste any more time
on this project unless the political leadership decides to push it
further.
4. (SBU) Progress was made on the pipeline during the reign of the
caretaker government when Iran and Pakistan agreed to link the
pipeline gas tariff with a formula for 40 percent price of global
crude oil. However, at the time, crude price in the international
market was USD 100 per barrel. Per the new demands, Iran now wants
to link the pipeline gas price with a formula for 80 percent of
global crude oil price which makes the project economically
unfeasible for Pakistan. According to domestic gas sources, the
locally produced natural gas price is USD 3.5 per MBTU.
5. (SBU) The Ministry of Petroleum and Natural Resources is expected
to seek further political instruction and guidelines before resuming
dialogue with Iran on the gas pricing issue. The Government is
expected to accelerate exploration of indigenous natural gas
resources which could be potentially vast.
PATTERSON