Pakistan plans to buy oil from Iran, thinks of ways to avoid sanctions
Dec 21, 2022
Islamabad [Pakistan], December 21 : Pakistan plans to buy oil and gas from Iran, but wants it do it in such a way that it escapes sanctions from the US and other Western countries.
According to Al Arabiya Post, a digital media organization in the Middle East, there is a general view in the Pakistan government that if they can trade oil and gas from Russia, another US-sanctioned country, then there may be no harm in trading the same from Iran. And Iran is also offering a better deal for oil supply. Iran has even offered wheat, meat and rice as payment for the export.
The Al Arabiya Post post quoted the statement of CEO of the National Iranian Gas Company, Majid Chegeni. He had declared that it would start negotiations for selling its oil to Pakistan. Further, these discussions moved forward on May 26, this year when Pakistan's Foreign Minister Bilawal Bhutto had met with his Iranian counterpart Hossein Amir Abdollahian on the sidelines of the World Economic Forum in Davos. Iran's Ambassador to Pakistan Mohammad Ali Hosseini mentioned the same offers.
The oil industry in Pakistan estimates that there can be a route to purchase cheaper oil from Iran avoiding sanctions from the US. As there is currently an oil shortage in Pakistan. According to the Al Arabiya Post When Iran recently offered oil and gas worth Euro 2 million as part of humanitarian assistance for flood victims, Pakistan was keen on accepting the offer. The only issue is how to avoid being sanctioned.
Although the foreign ministery of Pakistan stresses that the oil purchase must not be done involving any state owned entity of Pakistan. As any financial transactions related to oil from Iran can bring them into the radar of the US and the United Nation Secretary General.
The logistical arrangements for the transport of oil and gas products should be strictly done through Pakistan State Oil only. The National Iranian Tanker Company should not be utilised for these transactions, according to the Al Arabiya Post.
Previously, ahead of the 21st session of the Pak-Iran Joint Economic Commission (JEC) which is scheduled to be held from August 16-19 in Islamabad, Pakistan may buy liquified petroleum gas (LPG) from Tehran.
"Both sides have emphasized their commitment towards the early solution of IP project under GSPA and agreed to take necessary measures," the sources said, sharing details on the Pak-Iran Gas pipeline.
The 21st Session of the Pak-Iran Joint Economic Commission (JEC) will take into consideration the issues of the Pak-Iran Gas Pipeline, joint projects between OGDCL, National Oil Refinery (NIOC) and pending issues between NTDC, CPPA-G and Iranian company Tavanir, in addition to the promotion of barter trade and payment mechanism.
However, due to US sanctions, no cooperation could materialize so far.
Moreover, WAPDA and TAVANIR also entered into a contract agreement for 30 years for 32-MW electricity on November 6, 2002, to fend the requirements of Makran Division in Balochistan and TAVANIR showcased an interest to supply power to other bordering areas. Somehow, the rates per kWh were revised from time to time and MoU was signed on April 08, 2007, for the import of 1000-KW power from Zahedan, Iran to Quetta, Pakistan, stated the sources.
Notably, during the visit of the Prime Minister of Pakistan to Iran in April 2019, it was agreed that the legal teams from both sides would engage in finding out legal solutions for the implementation of the project. Accordingly, both sides executed Amendment Agreement No. 3 to the Iran Pakistan Gas Sales and Purchase Agreement (IP-GSPA) with NIOC on 5th September 2019 in Istanbul, Turkey.
