Pakistan has asked Iran to grant a fresh 10-year extension until 2035 for the implementation of the long-delayed Iran-Pakistan gas pipeline, as the country faces a possible $18 billion penalty in international arbitration.
According to reports, Islamabad has cited ongoing US sanctions on Iran as the main reason for its inability to complete its part of the project.
Iran initiated arbitration proceedings in September 2024, accusing Pakistan of failing to construct its segment of the pipeline despite multiple deadline extensions.
The case is being heard at a Paris-based arbitration forum under French law. Iran is seeking damages under the Gas Sales Purchase Agreement, arguing that Pakistan did not meet its contractual obligations.
Pakistan, however, is contesting the case and has maintained that international sanctions on Iran made it practically impossible to move forward with construction during the extended 180-day period.
The legal defense is being handled by the Attorney General’s office and the legal team of Inter-State Gas Systems, with support from the Petroleum Division.
At the same time, Pakistan is pursuing diplomatic efforts to reach an out-of-court settlement.
A Ministerial Oversight Committee, headed by Deputy Prime Minister and Foreign Minister Ishaq Dar, is reviewing various options to limit the country’s financial exposure.
Federal Minister for Petroleum and Natural Resources Ali Pervaiz Malik confirmed that the committee is actively examining possible solutions, although no diplomatic breakthrough has been achieved so far.
Officials expect the arbitration ruling to be announced in 2027 or 2028. Meanwhile, both countries are reportedly engaged in high-level talks to resolve the dispute outside the legal process.
While no formal proposal has been submitted, Pakistan is seeking Iran’s agreement for a further 10-year extension to avoid heavy financial penalties and keep the project alive.