Chinese Bank, Facing Sanctions, Quits Pakistan-Iran Pipeline Deal

Posted March 14th, 2012 at 2:42 am (UTC-5)
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Pakistani officials are examining options to finance a controversial gas pipeline from Iran after a Chinese bank backed out of the project.

The Industrial and Commercial Bank of China, which won a bidding contest for the right to finance the pipeline, has not explained why it is no longer interested. But a report this week from Pakistan's petroleum ministry cited changes in the “geopolitical situation,” an apparent reference to tightening U.S. sanctions on companies doing business with Iran.

Pakistani press reports said Thursday that Islamabad is still committed to going ahead with the project, which would provide the energy-poor country with 21 million cubic meters per day of gas. It will cost Pakistan more than $1.2 billion to lay pipe on its side of the border and hook up to the Iranian network.

The United States and several of its allies have been steadily tightening sanctions on Iran in a bid to deter it from what they believe is an attempt to develop a nuclear weapons capability.

Washington had previously warned that companies participating in the Iran pipeline project could face sanctions.