India, Pakistan Say Iran Gas Pipeline Deal Just 'Weeks' Away

NEW DELHI, April 25, 2008(Dow Jones Newswires)

A decade-old proposal to pipe natural gas from Iran to Pakistan and India could be closer to happening than ever before, with India and Pakistan just "weeks" away from resolving crucial bilateral issues related to the pipeline project.

The $7.4-billion Iran-Pakistan-India, or IPI, pipeline has been facing delays due to gas-pricing issues and more recently due to disagreements between India and Pakistan over transit fees.

The two countries have reached a broad understanding on the transportation tariff to be paid to Pakistan, but haven't yet agreed on the payment of a separate transit fee to Pakistan for allowing passage of the fuel.

"It will not take months but weeks, and in a week or two, we will announce the transit fee rates," Pakistan Petroleum Minister Khawaja Muhammad Asif said Friday at a joint press conference after holding talks with his Indian counterpart Murli Deora in Islamabad.

"Consensus was arrived at on the principles on which the bilateral agreement will be concluded," the Indian oil ministry said in a statement.

"The two ministers agreed to consult with their respective governments for an early conclusion of the agreement on the issues," the statement said.

Ministers of both the countries also denied any pressure from the U.S. not to go ahead with the project.

"We are not communicated anything on the U.S. government on this issue," Deora said.

"We have no communication from the U.S. too (on the Iran pipeline," Asif said.

India is facing an acute shortage of natural gas and has been considering the international gas pipeline route to meet demand, along with importing liquified natural gas and placing more emphasis on domestic production.

The country depends heavily on its coal reserves for its energy needs and imports three-quarters of the crude oil it needs.

Pakistan hasn't been able to develop its coal deposits and needs natural gas to meet its growing demand for energy.

The two countries are also part of a pipeline project to transport natural gas from Turkmenistan via Afghanistan to Pakistan and India. India formally joined the Asian Development Bank-backed project Thursday.

New Delhi has been skipping tri-national meetings on the IPI pipeline, as it waits to resolve the bilateral issues with Islamabad.

IPI pipeline is expected to supply 60 million cubic meters a day of gas in the first phase, to be shared by India and Pakistan, and 90 mcm/day in the second phase, according to oil ministry statements.

NEW DELHI, April 25, 2008(Dow Jones Newswires)