A reader asked why Pakistan is bringing gas through a war-disrupted chokepoint when Iran is next door. The answer leads from sanctions to Pakistan’s own failures, and an extraordinary irony created by Hormuz.
A reader left a comment under my recent discussion of Pakistan’s exposure to the Strait of Hormuz.
His question was written in capital letters:
“ALREADY IN PLACE IRAN-PAKISTAN GAS PIPE LINE PROJECT BUT UNDER US SANCTIONS ON IRAN, THIS CANNOT OPERATE?”
I understood what he meant.
I have been hearing versions of this argument in Pakistan for years. Iran has gas. Pakistan needs gas. We share a border.
Somewhere between the two sits the United States with its sanctions.
Why, then, are we bringing liquefied natural gas from Qatar through one of the most dangerous waterways in the world?
The question has become harder to dismiss.
In September, a tanker carrying about 82,000 tonnes of Qatari LNG reached Port Qasim after passing through the badly disrupted Strait of Hormuz. It was Pakistan’s first Qatar-origin LNG cargo through the strait since July. Another Pakistani-bound LNG tanker crossed later in the month.
Before the present war, roughly 125 large commercial vessels passed through Hormuz each day. Reuters counted only 17 commodity vessels crossing during the weekend of September 19–20. Some vessels may have been moving without normal tracking, but the collapse in visible commercial traffic was extraordinary.
I live in Karachi. Port Qasim is not an abstraction to me.
Neither is the gas shortage.
So I went back to the reader’s question.
It turns out that one part of his comment is right. Another part needs correcting.
Between the two lies a story Pakistan has avoided for more than twenty years.
The Pipeline Pakistan Never Built
The Iran-Pakistan pipeline is not a completed pipe waiting for someone to open a valve.
That distinction matters.
Under the original arrangement, Iran was to supply Pakistan with roughly 750 million cubic feet of gas a day. Pakistan was responsible for constructing approximately 781 kilometres of pipeline on its side.
Iran made substantial physical progress.
Pakistan did not build its section.
Petroleum Minister Ali Pervaiz Malik told the Senate in August that sanctions remained in place and Pakistan was therefore not taking practical construction steps. He also confirmed something more serious: the dispute between Pakistan and Iran had reached an arbitration tribunal in Paris. Dawn reported the minister’s account and the arbitration dispute.
Prime Minister Shehbaz Sharif has since established a high-level committee to examine the legal and energy questions surrounding the project, along with its financial implications.
There is another number that frequently appears whenever Pakistanis discuss this project: $18 billion.
I would be careful with it.
It has repeatedly been described as the penalty Pakistan might face for failing to fulfil its obligations. Pakistan’s parliamentary record makes clear, however, that the question of liability is tied to arbitration. Iran disputes Pakistan’s argument that sanctions created a force majeure or excusing event. Pakistan’s National Assembly record sets out the government’s sanctions position.
Pakistan does not currently have an established $18 billion bill sitting on a desk.
What it has is an unresolved international contractual dispute whose eventual cost remains uncertain.
What American Sanctions Actually Do
This is where Pakistani arguments often become too simple.
We sometimes speak of American sanctions as though Washington has placed a physical lock on the pipeline.
Pakistan’s Petroleum Division has explicitly told parliament that the project stalled because of international sanctions on Iran. It also said Pakistan had been unable to begin construction because of U.S. sanctions and had approached Washington through diplomatic channels seeking an exemption.
Sanctions cannot simply be dismissed as Islamabad’s excuse.
But consider what constructing and operating the pipeline would require.
Somebody has to finance it. Contractors willing to work on an Iranian project must then be found, equipment purchased and payments processed through banks that may have international exposure.
That is where sanctions begin to bite.
A bank does not need an American official to telephone its chief executive every morning.
If its compliance department believes an Iranian transaction creates unacceptable sanctions exposure, that can be enough. A contractor with international business may reach the same conclusion.
The project can stop without anyone physically blocking the pipe.
Pakistan’s Foreign Office added an important qualification in June. It said sanctions affecting economic cooperation with Iran were not exclusively American and specifically mentioned European restrictions as well. The Foreign Office briefing described the broader sanctions environment.
The reader who blamed U.S. sanctions therefore identified a major part of the problem.
He did not identify all of it.
Sanctions Are Not Pakistan’s Entire Alibi
This part makes me uncomfortable because Pakistanis, myself included, are accustomed to looking for the external power behind a national problem.
Sometimes it is there.
But twenty years is a long time.
Pakistan struggled with financing. Construction never began on the required scale. Commercial circumstances changed while governments came and went.
Iran waited.
Deadlines moved.
Eventually lawyers entered the story.
The result is peculiar. Pakistan needs gas and once signed a long-term agreement to buy Iranian gas, yet the country never constructed the infrastructure required to receive it.
Sanctions help explain that history.
They should not prevent us from examining Pakistan’s own decisions inside it.
Pakistan today is not the Pakistan that negotiated this pipeline.
The Pakistan That Signed This Deal No Longer Exists
Drive around Karachi in daylight and look upward.
Solar panels are difficult to miss now.
They are sitting on houses and shops. Industrial buildings have them too. Pakistan’s rapid solar expansion has started reshaping daytime electricity demand.
That matters to the pipeline debate.
Power Minister Awais Leghari told Reuters earlier this year that around 74% of Pakistan’s electricity was being generated from domestic sources in March. LNG accounted for roughly 10% of power generation and remained particularly useful for evening demand.
Pakistan had even cancelled 21 LNG cargoes scheduled for 2026–27 under its long-term arrangement with Italy’s Eni because demand had weakened.
That is quite a change from the Pakistan that negotiated the Iran gas deal.
We cannot take a twenty-year-old energy argument, dust it off and assume the economics remain identical.
The pipeline may still make sense.
Somebody needs to prove it with today’s numbers.
The $10 Gas Question
Geography plays tricks on us.
Iran is next door. Qatar is across the Gulf.
Surely Iranian gas must therefore be cheaper.
Perhaps.
Proximity alone doesn’t answer the question.
The Pakistan Institute of Development Economics recently revisited the project. Using the proposed Brent-linked pricing formula, PIDE calculated that at an illustrative Brent price of $75 a barrel, the gas commodity price would work out at about $10.09 per MMBtu. Read PIDE’s economic assessment.
That is an illustrative calculation, not a quotation for gas Pakistan could buy tomorrow.
Taking 750 million cubic feet every day could imply an annual gas-purchase commitment of roughly $2.84 billion, according to the same analysis.
Pakistan would still need to finance and construct its section of the pipeline.
Other analysts reach a more favourable conclusion. Energy-market specialists interviewed by S&P Global estimated that Iranian pipeline gas could save Pakistan roughly $3–$6 per MMBtu compared with LNG under their assumptions. They also cautioned that geopolitical obstacles would have to ease and commercial terms might require renegotiation. S&P Global reported the competing estimates.
I find the disagreement useful.
It tells us that “Iranian gas is cheap” is not an analysis.
Neither is “the pipeline is uneconomic.”
Run the numbers again.
The Pakistan of 2026 deserves a 2026 calculation.
Then Came the War
Pakistan’s LNG normally comes from Qatar.
To reach us by sea, it has to pass through Hormuz.
The war has turned that routine voyage into something requiring diplomacy.
In May, Reuters reported an extraordinary development. Pakistan had reached an arrangement with Iran concerning the passage of Qatari LNG shipments through Hormuz. Iran was increasingly regulating passage through the strait as normal commercial movement collapsed. Reuters reported on Pakistan’s Hormuz arrangement with Iran.
Read that again.
Pakistan could not complete a pipeline to bring Iranian gas across the land border.
Then Pakistan had to deal with Iran so that gas from somewhere else could get through the sea.
By September, this was no longer a one-off curiosity. Pakistan again secured passage for another Qatari LNG shipment through diplomatic engagement involving Iran.
That is the part of this story I cannot get out of my head.
For decades, sanctions made energy cooperation with Iran extraordinarily difficult.
Now the geography of the war has made cooperation with Iran relevant to Pakistan’s access to non-Iranian energy too.
The old debate has been turned upside down.
A Pipeline Would Solve One Problem, Not All of Them
At this point it would be easy to write the angry conclusion.
Build the pipeline.
Tell Washington Pakistan needs energy.
Problem solved.
I don’t think the evidence allows me to say that.
A land pipeline could reduce Pakistan’s exposure to the Strait of Hormuz for the volume of gas it carried. That is a genuine strategic advantage.
The gas, however, would come from Iran, a country under sanctions and at the centre of the present conflict. Pakistan would still need a workable payment mechanism.
There is also the physical route through Balochistan. Any serious costing of the project has to include the problem of protecting infrastructure over decades.
And while all this has been happening, Pakistan’s gas market itself has changed.
Solar has altered electricity-consumption patterns. The gas sector carries enormous circular debt. A long-term gas commitment that looked sensible in another era requires another look now.
This is why I don’t see the Iran pipeline as a magic route to Pakistani energy independence.
A pipeline can bypass Hormuz. It cannot bypass geopolitics.
The Reader’s Question Was Better Than It Looked
I went back to that capital-letter comment after doing this research.
“Already in place” was wrong.
Pakistan’s part isn’t.
The suggestion that sanctions have prevented the project from operating was much closer to reality, although sanctions are not the whole explanation.
Yet the reader had noticed something important.
Pakistan is struggling to obtain LNG through a maritime chokepoint while an unfinished gas project sits in our diplomatic files involving the country next door.
The irony has become stranger.
Pakistan has had to seek Iranian cooperation over the passage of Qatari LNG through Hormuz while the Iran-Pakistan land pipeline remains stalled.
I can imagine one of those tankers eventually approaching Port Qasim.
Most people in Karachi will never see it.
We will notice the consequences elsewhere, perhaps in a gas bill or another government announcement about energy conservation.
That is what has changed for me about this old pipeline debate.
I am not convinced that Pakistan should simply start laying pipe tomorrow. The sanctions problem is real. So are the contractual and financial questions.
But I am equally uncomfortable with pretending that doing nothing carries no cost.
For twenty years Pakistan has worried about the price of building the pipe.
Hormuz has now shown us the price of not having enough alternatives.
