Pakistan seeks up to 50% gas price cut, lower volumes from Iran to revive stalled pipeline project: report

Profit, citing The Express Tribune, reported that Islamabad wants Tehran to lower the price of gas on the Iran-Pakistan pipeline by up to 50%, and to reduce the contracted volume. Both governments are reopening a deal from more than a decade ago, and Pakistan argues that domestic buyers show little interest in energy at today's rates. Islamabad says it will proceed only with a US sanctions waiver for Iran.

Government calculations put the current pipeline price at $10.6 per mmBtu, or Rs2,970, which is above the LNG cost under PSO's second sale-purchase agreement of $7.14 to $9.18 per mmBtu across Brent scenarios of $60 to $80 a barrel. Islamabad's counteroffer uses a formula of 6.11% of Brent plus $1, referenced to Rs2,000 per mmBtu, which would bring the gas price to $4.67 to $5.89 per mmBtu and undercut LNG in every case.

Pakistan also wants less volume because it has limited room to absorb extra imported gas, and PSO is bound to take Qatari LNG or face damage claims from Doha. Domestic oil and gas explorers have posted losses running into billions of rupees after local field output was cut to accommodate LNG cargoes. The project, costed at $2.5 billion with capacity of 750 mmcfd, has stalled for years because of US sanctions on Iran, and Tehran has taken the matter to international arbitration, where the two sides now seek an amicable settlement.