Govt urged to re-negotiate gas pricing formula with Iran

ISLAMABAD: The Sustainable Development Policy Institute (SDPI) has urged the government to re-negotiate with Iran on gas pricing formula and delink it from crude oil prices.

In a press conference, Executive Director SDPI Abid Suleri said the government must take initiative in response to the statement of Managing Director of state-owned Iranian National Gas Company Hamid Raza who said Iran was ready to revise gas pricing formula with Pakistan.

He said keeping in view the energy needs of the country, Pakistan-Iran gas pipeline project is the best among all other options available including Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project.

He, however, raised questions on the existing pricing mechanism and rates agreed between Pakistan and Iran. Citing the examples of Turkey and Armenia who are purchasing Iranian gas on forty to fifty percent less prices than the crude oil prices, Abid Suleri said Pakistan also can save up to 2.5 billion dollars annually on the negotiated gas prices.

He said current pricing formula linked with crude oil prices gives only 13 percent benefit which is much less as compared to the price agreed with Turkey and Armenia. He stressed the benefit can be raised up to 50 percent after re-negotiations with Iran.

Regarding international sanctions, he said Pakistan can escape from them either by converting the project into a Bilateral Investment Treaty or applying for waiver in the United Nations. He said both Turkey and Armenia have been getting waiver because of their energy needs.

He also stressed gas pricing mechanism should be delinked from the international crude oil prices. He said in the emerging international scenario, gas pricing formulas are linked with British Thermal Unit (BTU).

SDPI Executive Director said Pakistan needs to tap the Shale gas reserves, as over one-hundred-thousand cubic feet stocks are buried under Pakistani soil, which are enough to make the country self-sufficient in natural gas.