India and Pakistan to hold Iran pipeline talks

New Delhi: India, Asia's third-largest oil consumer, plans to resume talks with Pakistan over a pipeline to transport natural gas from Iran after more than a decade of delays, Indian Oil Minister Murli Deora said.

Engineers from India will meet their counterparts in Pakistan this week when the new government takes office in Islamabad, Deora said in an interview at his ministry in New Delhi on Friday.

Iran, which has the world's second-largest oil and natural gas reserves, agreed to sell gas to India in 1995.

The $7.4 billion project stalled because India couldn't agree with Iran on the price for the gas or the fees it will pay Pakistan for transporting the fuel. The 2,100-km pipeline was shelved when the South Asian neighbours came to the brink of war after a terrorist attack on India's parliament in 2001.

Very keen

"We are very keen that the project goes through," said Deora, 71. "In the last two months we planned four trips to Pakistan to settle small issues. Let them form the government and let there be an oil minister and we are ready to come."

India can produce only half the gas it needs to generate electricity, causing blackouts and curbing economic growth. Demand may more than double to 400 million cubic metres a day by 2025 if the economy grows at the projected rate of 7 to 8 per cent a year, according to the oil ministry.

Talks are more likely to progress after Pakistan elected Yousuf Raza Gillani as its new prime minister this week, ending six months of political instability that culminated with the suspension of the constitution in November and the assassination of Benazir Bhutto in December.

Iran plans to start exporting gas to Pakistan in 2011. Iran has completed half the pipeline, which can carry 110 million cubic metres of gas a day, National Iranian Gas said this month. India uses about 108 million cubic metres of gas a day, according to a BP report.

The US, seeking to isolate Iran because of its pursuit of a nuclear programme, had wanted the project scrapped. Deora said the US is not opposed to the project.

"The Americans have not told us in clear terms that you should not support or go ahead with this pipeline project,' Deora said. "They are our largest trading partner. But that does not mean they can bully us on where to buy and where not to buy."