Iran has issued its final notice to Pakistan, emphasizing that Tehran has no choice but to take legal action if Islamabad fails to procure gas within the extended 180-day deadline. The notice warns that if the pipeline under the IP-Gas project is not constructed by September 2024, Iran will refer the matter to the Paris Arbitration Court.
Senior government sources informed that the project has faced a decade of delays since 2014, when the Gas Sales Purchase Agreement (GSPA) was signed under French law in 2009. The Paris-based arbitration court, the designated forum for resolving disputes between countries, does not recognize U.S. sanctions.
Iran’s final notice underscores that Pakistan’s Interstate Gas Systems (ISGS) and the National Iranian Gas Company (NIGC) revised the agreement in September 2019. The revised deal requires Pakistan to lay its section of the pipeline by 2024. In return, Pakistan is to receive 750 million cubic feet of gas per day from Iran.
Under this agreement, Pakistan was obligated to construct its section of the pipeline by February-March 2024. However, Iran extended the deadline by 180 days, pushing it to September 2024. Iran’s final notice indicates that Pakistan has yet to begin pipeline construction.
This final notice follows a second legal notice issued by Tehran in December 2022. That notice demanded Pakistan construct its part of the Iran-Pakistan pipeline by February-March 2024 or face an $18 billion penalty.
Tehran had also sent a notice in February 2019, threatening to approach the arbitration court for Pakistan’s failure to meet the pipeline construction deadline and invoking the GSPA penalty clause. The GSPA, signed in 2009 for 25 years, has yet to materialize.
Senior officials reveal that top decision-makers in the current government are deeply concerned about Iran’s final notice. In response, petroleum division officials have begun strategizing on how to address the situation within the 10-day notice period.
The authorities are in the process of hiring a foreign law firm to represent Pakistan in the arbitration court if needed.
