Pakistan, Iran to ink refinery deal

REUTERS

Pakistan's President Asif Ali Zardari. REUTERS/Osman Orsal

Islamabad - Pakistani President Asif Ali Zardari will travel to Iran on Wednesday, where he is expected to sign a major deal to build an oil refinery with Tehran's help, officials said.

During a two-day stay in Tehran, the president will hold talks with the Iranian leadership on a host of bilateral issues and the regional situation, Zardari spokesman Farhatullah Babar said in a statement.

“The president has been urging for further strengthening of the bilateral relations and for early completion of the mega projects between the two countries and (he) expressed the hope that the visit would lend further impetus to the efforts aimed at early completion of the bilateral projects,” Babar said.

He did not specify the projects, but official sources said he is expected to sign an oil refinery deal valued at about 4 billion dollars and also discuss a pipeline project through which Iran would provide gas to Pakistan.

“The multibillion-dollar oil facility will produce about 400,000 barrels per day,” an official of Pakistan's Finance Ministry said on condition of anonymity. “This production capacity is beyond our needs.”

During bilateral talks in Islamabad last week, Iran agreed to help Pakistan set up an oil refinery in Gwadar, a town off the country's southern coast, the official said.

Gwadar lies close to the Strait of Hormuz, a key route for world's oil shipments.

Pakistan is facing severe energy shortages that have crippled the dwindling economy.

But cooperation with Iran has stirred unease in the United States, which has urged Pakistan to seek non-Iranian options to deal with its energy crisis.

“We have made it clear to countries around the world, including Pakistan, that we believe that it's in their interest to avoid activities that could be prohibited by UN sanctions or that could be sanctionable under US law,” State Department spokeswoman Vitoria Nuland said Thursday.

Pakistani officials have stated that Islamabad would pursue all options to meet its growing energy needs, including a long-awaited gas pipeline from Iran, which is also the subject of US objections.

Already done with laying its part of the gas pipeline, Iran has now agreed to help construct about 750 kilometres of pipeline through Pakistan, Iran's Shana website said last week, citing the country's deputy petroleum minister, Javad Oji.

Iran plans to start delivery of 21.5 million cubic metres of gas per day from its South Pars gas field to Pakistan by December 2014.

In Tehran, Zardari is also to meet his Iranian counterpart, Mahmoud Ahmadinejad, a Pakistani Foreign Ministry official said. - Sapa-dpa