Pakistan and Iran Sign Pipeline MOU

Pakistan and Iran signed a memorandum of understanding to undertake a pre-feasibility study for a proposed 1,600-mile Iran-India gas pipeline after a second day of talks on the project. The MOU was signed by visiting Iranian Oil Minister Bijan Namdar-Zangeneh and Pakistan Petroleum and Natural Resources Minister Usman Aminuddin.

Pakistan Finance Minister Shaukat Aziz told Zangeneh that the proposed trans-Pakistan pipeline would cost around four billion dollars and require complex financing. He said the project "would require intricate financing techniques and a major role of export credit agencies from OECD (Organisation for Economic Cooperation and Development) countries as well as multilateral financial institutions", according to the statement. Zangeneh said they would hold further discussions on financing as the project advanced.

Under the plan, natural gas would be transported from southern Iran via a 1,000 mile pipeline to Sindh province in Pakistan and on to India through a 625 mile pipeline.

The Iranian oil minister updated Aziz on the latest developments in the project. "He advised several options were being explored including overland and undersea pipeline for which necessary pre-feasibility studies have been initiated," the statement said.

Aminuddin Thursday told Zangeneh that Pakistan would provide "all-out help and cooperation to make the Iran-India gas pipeline project viable".

Islamabad and Tehran also agreed Friday to discuss the feasibility of a joint Iran-Pakistan oil refinery to be built on Pakistan's coast. Zangeneh said he would examine the possibility of participating in oil and gas exploration in Pakistan. The two sides also discussed boosting bilateral cooperation in the oil and gas sector, including gasoline exports from Pakistan and increasing imports of crude oil and diesel from Iran. Pakistan offered technical help to Iran to develop a compressed natural gas (CNG) industry for vehicular use and agreed to send a technical delegation to Iran to study the matter. The two sides also agreed to take steps to eliminate cross-border smuggling of petroleum products. Iran sits on the world's second largest proven gas reserves after Russia, has recently started delivering natural gas to Turkey and plans to export gas to Europe and China as well as India in the next few years. Pakistan is also considering potential cross-border gas pipeline projects with Turkmenistan and Qatar.