Subcontinent discusses possible Iran pipeline

PIPELINE DEAL: Deora was to hold talks in Pakistan this week on a $7 billion transnational gas pipeline from Iran. (AFP)

India's oil minister Murli Deora was to hold talks in Pakistan this week on a $7 billion transnational gas pipeline from Iran, a senior oil ministry official said Tuesday.

Deora's three-day visit is the first contact between the rival South Asian states since the new coalition government took office in Islamabad last month.

He was also to explore the possibility of India exporting diesel to Pakistan, the official said.

Meetings between the two oil ministers starting Wednesday will focus on resolving differences over transit and transportation fees to be levied by Pakistan for allowing the pipeline through its territory, said the official who declined to be named.

While "transit fees will cover the security of the pipeline", expected to cross Pakistan's volatile Balochistan province, "transportation tariff is the normal fee charged for the passage of fuel," he said.

Islamabad is seeking $0.493 per million British thermal unit as transit fee, while New Delhi has offered $0.15 per unit or $60 million a year, he said.

Differences on tariffs have been narrowed but are yet to be resolved.

"At the end of the day, the gas supplied to India at its borders has to be cost viable," said the official adding that India is "committed to the project for which it has participated in feasibility studies".

Deora's Pakistan trip comes a week ahead of Iran's President Mahmoud Ahmadinejad day-long stopover in New Delhi.

Talks on the 2,600-kilometre Iran-Pakistan-India pipeline began in 1994 but have been stalled by tensions between India and Pakistan.

Energy-hungry India, which imports more than 70% of its energy needs, has been racing to secure new supplies of oil and gas from abroad besides ramping up domestic production to sustain booming economic growth.

Deora and his Pakistani counterpart will also exchange views over the proposed Turkmenistan-Afghanistan-Pakistan gas pipeline, to be funded by the Asian Development Bank, the oil ministry official said.

"All the countries are keen that India participates in the project," the official said.

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