India, Pakistan to discuss gas line from Iran

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India and Pakistan expect to open talks late next week on the construction of a so-called "peace pipeline" from Iran, despite U.S. concerns about the $4 billion deal.

The proposed pipeline would carry Iranian natural gas from the Persian Gulf across Pakistan to India, offering economic and diplomatic benefits to both of the South Asian rivals.

But Secretary of State Condoleezza Rice expressed reservations about the plan during recent visits to India and Pakistan because of American desires to isolate Iran, which it fears is seeking to develop nuclear weapons.

"We have communicated to the Indian government our concerns about the gas pipeline cooperation between Iran and India," Miss Rice told reporters after March 16 meeting with Indian Foreign Minister K. Natwar Singh in New Delhi.

The United States has warned India that it could run afoul of the Iran-Libya Sanctions Act, which empowers President Bush to order punitive measures against any international company that invests more than $20 million a year in Iran's energy sector.

Nevertheless, a spokesman for Indian Petroleum Minister Mani Shankar Aiyar announced this week that Pakistan had proposed June 4 to 7 as the dates for an initial round of talks on "hydrocarbon cooperation."

"The visit is to probe Pakistani thinking on the viability of the project. While Pakistan has been saying there is no hitch to the project, it is only after talking to them that we will get a better sense of timing and viability," the official said.

The proposed pipeline would stretch for 1,724 miles across southwestern Asia, of which 472 miles would be in Pakistan. Both India and Pakistan would draw gas from the pipeline, which later could be extended beyond India.

However, numerous legal and commercial issues between the countries have yet to be resolved as well as concerns within India's security services about relying on Pakistan for its energy needs.

The Petroleum Ministry official said the June 4 meeting would mark "the first time India and Pakistan would be formally discussing the pipeline in concrete terms of quantum of gas requirements and issues related with the route and the transit fee that India would have to pay."

Gas for the pipeline would come from Iran's South Pars gas fields in the Persian Gulf, which can be produced and sold to energy-hungry India at highly competitive prices. Both India and Pakistan also welcome the project as a means of building mutual trust amid cautiously improving relations.

Security issues are expected to be raised during the initial talks, with Pakistan reported to be thinking of contracting its armed forces to protect the pipeline in exchange for an annual fee of $100 million. India also would pay Pakistan a transit fee for the gas that passes through its territory.

Mr. Aiyar also hopes to explore the possibility of exporting diesel fuel to Pakistan and discuss how Indian companies can pursue oil-exploration projects in Pakistan.