Issue Brief on “Fueling Progress: The Iran-Pakistan (IP) Gas Pipeline”

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On March 13 2024, Pakistan announced the construction on an 80-kilometer (49-mile) segment of the Iran-Pakistan gas pipeline, also known as the ‘Peace Pipeline,’ within its territory, signifying an important step towards economic connectivity between the two countries.

Originally proposed in 1994 as the Iran-Pakistan-India (IPI) pipeline, the project evolved into a bilateral venture between Pakistan and Iran following India’s withdrawal in 2008. India’s decision to pull out of the project was influenced by escalating U.S. sanctions against Iran, coinciding with India’s signing of a civil nuclear deal with the U.S. in 2008. Citing concerns over pricing and security, India officially withdrew from the project the following year. In March 2010, Pakistan and Iran agreed to the IP project in Ankara.[1]  The deal mandated completion of each country’s pipeline segment by 2014 and failure to meet the deadline entailed a significant penalty in dollars terms. By March 2012, Pakistan’s Ministry of Finance voiced concerns over funding. Options included seeking assistance from Iran, China, and Russia. Nonetheless, Pakistan ratified the agreement in January 2013 and in March 2013 work on the pipeline officially commenced.

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