TEHRAN - In a significant step towards enhancing energy cooperation between Pakistan and Iran, Islamabad has given the green light for advancing much-delayed work on the Iran-Pakistan gas pipeline within its territory.

The approval comes as Pakistan has scrambled to avoid a staggering 18-billion-dollar fine, with the government authorizing the commencement of long-awaited work on the initial 80-kilometer phase within its borders, Shana reported.

Analysts say the project will improve Pakistan's energy security and support regional industries by providing stable and enhanced gas supplies.

Iran has extended the project deadline by 180 days until September 2024 to avoid a legal dispute with Pakistan at international tribunals.

The project, launched in 2013, had initially required Pakistan to finish the construction of the pipeline on its territory by the end of 2014.

However, the project faced prolonged delays due to the potential challenges it posed for Pakistan amid international sanctions targeting Iran.

The delay has upset Iran, which has already invested $2.0 billion in the pipeline on its side of the border having completed its section of the pipeline.

Pakistan had also expressed its commitment to constructing an 800-kilometer pipeline to the Iranian border by the end of 2014.

However, Islamabad couldn't fulfill its end of the bargain amid U.S. pressure and under threat of sanctions.

The IP pipeline will allow Pakistan to start receiving 750 million cubic feet of gas from Iran daily once the pipeline is completed and commissioned. In February 2019, Tehran notified Islamabad of its intention to move forward with arbitration court proceedings for not constructing the pipeline in Pakistan’s territory within the specified time frame under the IP gas line project and invoked the penalty clause of the Gas Sales Purchase Agreement (GSPA).

In September 2019, Pakistan’s Inter-State Gas Systems (ISGS) and the National Iranian Gas Company (NIGC) signed a revised agreement for the pipeline’s construction, which stipulates that neither Iran nor Pakistan will take the other to court for delays or impose fines until 2024.

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