FT: Pakistan and Iran Reach Agreement on Unmet Gas Deal

Energy-starved Pakistan has convinced Iran to step back from demanding $200m a month from January 1 to compensate for Islamabad’s failure to begin receiving gas from Iran’s South Pars gasfield, according to the country’s minister for petroleum.

Pakistan has in the past said the Iranian gas is the cheapest option available as its own reserves in the country’s south and southwest dry up. However, officials have complained of continuing US pressure on Islamabad to keep the arrangement with Iran on hold until US-led international sanctions on Tehran are lifted.

The “new understanding” between the countries revealed by Shahid Khaqan Abbassi removes for now a “take or pay” obligation on Pakistan to compensate Iran whether or not it receives anything under a contract linked to the pipeline.

“We have a new understanding with Iran,” Mr Abbassi told the Financial Times. “There will be no penalty applicable from January 1.” MORE