Iran eyes Pakistan, India agreement on gas pipeline

TEHRAN, July 8 (Reuters) Iran is ready to sign a seven billion doillars tri-nation gas pipeline project with India and Pakistan when the two neighbours resolve differences over the transit fee for movement of the gas, a senior official was quoted today as saying.

India and Pakistan have agreed in principle to calculate a transportation fee for Iranian gas to be supplied via a pipeline, but are yet to agree on a transit fee for the gas moving across Pakistan into India.

''After India and Pakistan reach an agreement on transit fee ... we will move toward signing a contract,'' Hojjatollah Ghanimifard, an international affairs director with the National Iranian Oil Company (NIOC), told the Sharq newspaper.

The pipeline would initially carry 60 million cubic metres (2.2 billion cubic feet) of gas daily to Pakistan and India, half for each country. Under the plan, the pipeline's capacity would be increased to 150 million cubic metres at a later date.

Iran says it has completed 18 per cent of the work for the pipeline, which will supply gas from its prolific South Pars field up to Iran-Pakistan border. Pakistan has yet to begin on a 1,000 km stretch of the pipeline to link Iran with India.

Tehran hopes to start supplying gas to India and Pakistan, need to tie up fuel supplies for their energy-hungry economies, by 2011 through the pipeline.

Iran has the world's second-largest gas reserves after Russia. However, sanctions, politics and construction delays have slowed its gas development, and analysts say Iran is unlikely to become a major exporter for a decade.

Some Indian newspapers reported the tri-nation talks over the pipeline project had failed after Iran demanded a gas price review every three years, the Sharq daily reported. Ghanimifard denied that.

''India and Pakistan have accepted that Iran's demand for the gas price review based on market changes is logical,'' the ministry's official website SHANA quoted Ghanimifard as saying.

Iran had earlier said it expected a deal on the pipeline by the end of June 2007.

REUTERS PD BST1920