Iran has sought an amendment to the gas sales and purchase agreement (GSPA) for the Iran-Pakistan-India (IPI) gas pipeline project in order to include the term “situation of armed conflicts or war” under force majeure clauses, official sources told Daily Times on Friday.

Legal cover: The move aims at providing a legal cover against a gas supply disruption to the buyer countries, Pakistan and India, in case the seller country, Iran, is faced with a situation like an armed conflict or a war, the sources explained.
Iran has told Pakistan that the term ‘Act of War’ under ‘excusing event’ should be replaced by a suitable substitute such as ‘situation of armed conflicts or war’ in the GSPA for the gas pipeline project, the sources added.
However, legal experts have recommended that Pakistan could consider this change, as it covers armed conflicts between states rather than groups within a state, and it has a material impact on gas supplies, or off takes, by the seller or the buyer.
ECC body: Later, a meeting of the sub-committee of the Economic Co-ordination Committee (ECC) on gas import projects agreed to this proposal, and approved that the government should negotiate with Iran on the basis of the legal experts’ recommendation.
After agreeing on a gas price formula on October 23, 2007, Pakistan and Iran had agreed in principle during the secretary-level talks to sign the GSPA for $7.4 billion IPI project in the next two months. However, many amendments, proposed by Iran and India, have delayed signing of the GSPA for an indefinite period.
The recent amendment proposed by Iran requires further negotiations between the contracting countries, which would delay the signing and implementation of the GSPA, said the sources.
While the domestic gas reservoirs in Pakistan have almost depleted and the demand for gas is on the rise in line with economic expansion, the supply-demand gap is expected to be 26 mmscmd in 2011-12, 77 mmscmd in 2015 and 293 mmscmd in 2025.
If the GSPA is implemented, Iran will start supplying gas to Pakistan by the year 2013. Pakistan and Iran will build the pipeline in their respective territories. The proposed 2,670-km IPI pipeline project has about 1,115 km length in Iran, 705 km in Pakistan and 850 km in India.
(Source: Daily Times)