Iran has issued a final warning to Pakistan regarding completing its section of the cross-border gas pipeline, threatening international arbitration and potential financial penalties. This warning intensifies the ongoing dispute over the 1,900-kilometer pipeline, which is crucial for Pakistan’s energy needs as its gas reserves are set to deplete within a decade.
Tehran claims to have invested $2 billion in its 1,150-km section, inaugurated in 2013, while Pakistan’s segment remains unfinished due to U.S. sanctions related to Iran’s nuclear program. Last year, Islamabad invoked a force majeure clause to suspend its contractual obligations, a claim Iran rejected.
Pakistan recently began construction on the initial 80-kilometer phase of the pipeline but has made little progress amid U.S. warnings against importing Iranian gas. Iran is now poised to take the dispute to the International Court of Arbitration if Pakistan fails to meet an imminent completion deadline.
Experts suggest that a Paris-based court could impose penalties of up to $18 billion on Pakistan if it loses the case. The situation poses significant challenges for Islamabad, which is already navigating a $7 billion bailout from the International Monetary Fund (IMF).
