ISLAMABAD: Pakistan and Iran signed on Friday an agreement for supply of gas from Iran through the $7.5 billion pipeline project to be completed by the end of 2014. The cost for the Pakistan section of the project is estimated at $1.65 billion.

The ‘sovereign guarantee’ agreement was signed by S.R. Kasaezadeh, Managing Director of the National Iranian Oil Company, and Irshad Kaleemi, Joint Secretary of the Ministry of Petroleum and Natural Resources. Petroleum Minister Naveed Qamar and Secretary Kamran Lashari attended the signing ceremony.

Under the gas sale and purchase agreement (GSPA), Pakistan will import 750 million cubic feet a day (mmcfd) with a provision to increase it to one billion cubic feet a day (bcfd).

The volume of imported gas will be about 20 per cent of Pakistan’s current gas production and the agreement is for a period of 25 years, renewable for another five years. The gas will be provided to the power sector to generate about 5,000 megawatts of electricity.

As a part of the conditions precedent (CPs) to be completed by the parties to make the agreement effective, the government of Pakistan is providing a ‘performance guarantee’ on behalf of the InterState Gas Company.

Since all other CPs of the agreement have been completed, the project is ready to enter the implementation phase.

The petroleum minister said that construction of the pipeline would create jobs, provide vocational training and develop backward areas of Balochistan and Sindh.

“The IP project will be another testimony of the long historic and cordial relations between Pakistan and Iran,” Mr Qamar said.