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LIVE

Tuesday, 14 October, 2008, 16:20 GMT | more prices >>

India and Pakistan close to pipe deal

News wires

India and Pakistan are just "days or weeks away" from finalising terms for a cross-border pipeline to import gas from Iran following talks in Islamabad today.

Indian Oil Minister Murli Deora and his Pakistani counterpart Khawaja Muhammad Asif held a joint news conference after discussing issues, including transportation tariff and transit fees, for a project that has had a stop-start history.

"We have agreed upon the fundamentals of the agreement," Reuters quoted Asif as saying. "The whole process should not take a long time, may be few days or few weeks and the agreement will be concluded."

Pipeline diplomacy is likely to be a feature of Iranian President Mahmoud Ahmadinejad's visits to Pakistan and India early next week.

The $7.6 billion project has been dubbed the "Pipeline for Peace and Progress" because of the mutual benefits it will bring to India and Pakistan, two countries that have fought three wars since they were divided by the partition of India in 1947.

The step forward came a day after India joined Pakistan in an agreement signed in Islamabad with officials from Afghanistan and Turkmenistan for another multi-billion project to pipe gas across the mountains of Central Asia to South Asia.

While construction for the Turkmenistan pipeline project is expected to start in 2010, building the pipeline from Iran is seen beginning next year, and could be finished in 2012.

While the US had promoted the Turkmenistan gas pipeline project, it had tried to discourage India and Pakistan from any deal with Iran in the past, because of Tehran's suspected ambitions to build nuclear arms.

Pakistan and Iran had said they would go ahead with the project even if India opted out, after New Delhi dropped out of trilateral talks in mid-2007, saying it wanted to resolve issues with Pakistan first.

"We discussed the matters in a very positive spirit and have reached agreement on the principles on which we hope the project can go ahead," Deora said.

The pipeline would initially carry 60 million cubic metres of gas per day to Pakistan and India, half for each country. The pipeline's capacity would later rise to 150 MMcmd.