Pakistan Seeks Up to 50% Gas Price Cut in IP Pipeline Renegotiations

Pakistan has formally requested Iran to reduce the price of gas supplied through the Iran-Pakistan (IP) pipeline project by up to 50% and also seek a reduced volume under the project. The current pricing exceeds even the cost of imported liquefied natural gas (LNG), with Qatari LNG previously criticized for its high price, leading Pakistan to divert 24 LNG cargoes due to weak demand.

The government has proposed a rate as low as $4.67/mmBtu against Iran's current ask of $10.6/mmBtu, which is undercutting even LNG costs in all scenarios. The project's cost is estimated at $2.5 billion with a planned capacity of 750 million cubic feet per day (mmcfd). Pakistan wants this volume reduced due to limited room to absorb additional imported gas.

The pipeline project has remained unimplemented for years due to US sanctions on Iran, and Islamabad has drawn up a negotiation strategy with Tehran in anticipation of a possible US-Iran peace deal that could lift sanctions. The government has also stated it could move forward with the project only if US President Donald Trump grants Iran a sanctions waiver.