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Wednesday, June 10, 2009

Rauf Klasra: Pakistan, Iran quietly sign gas deal in Turkey

ISLAMABAD: Pakistan has finally signed the IPI gas pipeline deal with Iran in Turkey on June 5, in relative silence, days before the Iranian election and without any major discussion or debate within Pakistan on whether it was prudent to pay a high price compared to the one originally agreed by Tehran.

According to salient features of the gas sales and purchase agreement (GSPA), Pakistan has decided to purchase only 750 mmcfd gas for 25 years, renewable for another five years. Delivery point of the gas will be at the Iran-Pakistan border near Gwadar at a minimum pressure of 55 Barg (800 psig). The project on completion will be able to support 4,000 MW of power generation capacity.The documents show Pakistan and Iran agreed in January 2007 on a gas price formula, which linked the delivered gas price at Pakistan’s border to Japanese Crude Cocktail (JCC), on an average crude oil parity of 45 per cent.Interestingly, the Pakistani document reveals that “Iran took the plea that its parliament had decided that the price of gas to be exported should match the price being paid by its other buyers, namely Turkey and Armenia. Accordingly, Iran offered a revised price having an average crude oil parity of 78 per cent”.


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