(Reuters) – Iran finalized a $7 billion “peace pipeline” deal on Sunday to export natural gas to Pakistan by 2015, Iran’s state television reported.
“The deal was signed. Export of Iran’s gas to Pakistan will be launched by the end of 2015,” state TV reported.
“For 25 years Iran will export one million cubic meters of natural gas to Pakistan per day,” it said.
The project is crucial for Pakistan to avert a growing energy crisis already causing severe electricity shortages in the country of about 170 million, at the same time as it confronts Islamist militancy.
Iran has the world’s second largest gas reserves after Russia but has struggled for years to develop its oil and gas resources. Iranian officials say the country needs $25 billion to develop its crucial energy industry.
Sanctions by the West, political turmoil and construction delays have slowed Iran’s development as an exporter.
The pipeline will connect Iran’s giant South Fars gas field with Pakistan’s southern Baluchistan and Sindh provinces.
State television said the pipeline was 1,000 km (620 miles) long, with about 907 km of it already built.
Dubbed the “peace pipeline,” the project has been planned since the 1990s and originally would have extended from Pakistan to its old rival, India. New Delhi has been reluctant to join the project because of its long-running distrust of Pakistan, with whom it has fought three wars since independence in 1947.
Under a deal signed in March, Pakistan will be allowed to charge a transit fee if the proposed pipeline is eventually extended to India.
The United States has tried to discourage India and Pakistan from any deal with Iran because of Tehran’s disputed nuclear programme, which the West fears is a cover to build bombs.
Iran, hit by a fourth round of U.N. sanctions on Wednesday over its refusal to suspend its uranium enrichment activities, denies any such ambitions.
(Writing by Parisa Hafezi, Editing by Paul Tait)