Pakistan, India close to deal for Iran gas pipeline

By Augustine Anthony

ISLAMABAD (Reuters) - 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 on Friday.

Indian Oil Minister Murli Deora and Pakistani Petroleum Minister 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," Asif said. "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.

The nuclear-armed rivals are both desperate to tie up future energy supplies to fuel their fast growing economies.