Iran Warns Pakistan of Legal Action Over Delayed Gas Pipeline, Final Notice Issued

The long-delayed Pak-Iran gas pipeline project is once again under scrutiny as Iran has issued a final warning to Pakistan regarding the repeated postponements of the project. According to sources, Iran has conveyed its serious concerns to the Pakistani government, stating that no additional time will be granted for the project’s completion. If Pakistan fails to fulfill its obligations, Iran has threatened to escalate the issue by taking it to the International Court of Arbitration in September.

The gas pipeline project, which was initially set in motion in 2009, has faced numerous delays, primarily due to concerns over potential US sanctions. Despite a revised agreement signed in 2019, which extended Pakistan’s deadline to complete its portion of the pipeline by February-March 2024, the project remains stalled. Iran had previously granted a 180-day extension, set to expire in September 2024, but Pakistani authorities have yet to meet the commitment, prompting the final notice from Iran.

The project holds significant importance for both countries, as it aims to transport 750 million cubic feet of gas daily from Iran to Pakistan. Failure to complete the pipeline could lead to severe financial penalties for Pakistan, potentially amounting to $18 billion, as outlined in the Gas Sales Purchase Agreement (GSPA) signed between the two nations.

In response to the potential legal action, Pakistan is reportedly considering options to negotiate a resolution with Iran. Officials from the Petroleum Division are exploring legal aspects and have initiated discussions to take Iran into confidence regarding the project’s delays and future developments. Pakistan is also in the process of hiring a foreign law firm to prepare its case for the Arbitration Court, should the matter proceed to international arbitration.