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Iran Inaugurates New Gas Pipeline to Pakistan

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Iran inaugurated part of what it said is a new gas pipeline between its main South Pars gas field and neighboring Pakistan.  Tehran said new economic sanctions will not stop the deal with Pakistan.

With great fanfare, Iran's top vice president, Mohammad Reza Rahimi, presided over the inauguration of what the Iranian press is calling the "peace pipeline," from the main South Pars gas field to the Pakistani border.  It could not be independently confirmed how much of the pipeline is actually functioning.

Iran's Press TV indicated that 907 kilometers of the project are complete, at a cost of $7.5 billion.  Iran's Fars news agency said in one report the pipeline had begun exporting gas to Pakistan, while insisting in another report the flood in Pakistan is preventing the process from going ahead.

Iranian TV says the pipeline is tied to a gas contract signed last June with Pakistan and claims Iran also will eventually sell gas to India via the same pipeline.

Iran analyst Gary Sick, who teaches at Columbia University, notes the United States is hoping to persuade India not to go ahead with any deal.

"[Iran] did in fact have an agreement with Pakistan and potentially with India for that gas pipeline to go all the way across Pakistan and potentially deliver gas to India," said Sick.  "The United States tried to persuade India not to do that, and it is not clear that it will actually happen in the end, partly because of the difficulties between India and Pakistan."

Sick thinks Iran's biggest challenge is to convince its own skeptical public about its economic prospects.  "I think that it is probably true that probably some section of a gas pipeline has been completed.  That is it.  They are trying to put the best possible face on it, not only to show defiance in the face of the rest of the world, but to persuade their own people that they are doing a really good job, and that is a tough thing to do, because their own people see what the state of the economy really is."

Iran claims to have the second-largest reserves of natural gas in the world after Russia.  But according to Gary Sick, Iran's neighbor, Qatar, has done a much better job of exploiting its resources.

"If you look at Qatar, which shares a major gas field with Iran, they were off and running very early.  They have a massive gas project that is underway and, in fact they are becoming sort of the leading country in the world, and at the same time Iran has not even started exploiting its gas capabilities, mostly because they do not have the investment capital they need to pump into it."

Sick says U.N., U.S. and EU sanctions are definitely an "impediment" to Iran's oil and gas industry, but a more critical issue is Iran's "own economic mismanagement."  He points out that Iran consistently has "scared away foreign investors," in addition to devising what he calls "crackpot economic schemes" that are popular, but do not work.

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