Report by Ketan Tirodkar

[ i of iran and islamabad has been i s small in the spirirt of the IReport]

    iSLAMABAD: Energy-hungry Pakistan has signed a $7.5 billion deal with oil-rich Iran paving the way for laying the much-delayed natural gas pipeline that was originally envisaged to extend upto India.

The 900-kilometre pipeline is expected to mitigate the crippling energy crisis in Pakistan which has seriously hit the country's industry.

The Inter-State Gas Systems, a semi-autonomous body that will take care of Pakistan's interests in the import of gas through the pipeline, and the National Iranian Oil Company signed the heads of agreement and an operational accord in the Turkish capital Istanbul yesterday.

Pakistan's Petroleum and Natural Resources Minister Syed Naveed Qamar said in a statement that India is currently not part of the deal. However, he said the heads of agreement dealt with transporting gas meant for India through Pakistani territory if and when India decided to join the project.

Under the heads of agreement, Pakistan will have the right to charge transit fee for gas transported to India. Qamar described the signing of the pacts as a "historic achievement and a milestone towards meeting the energy needs of Pakistan".

The pipeline is being built between Asalooyeh in southern Iran and Iranshahr near the border with Pakistan and will carry the gas from Iran's South Pars field. The pact also addresses the issue of transportation tariff, which will be worked out in line with international practices.

The volume of 750mmcfd to 1 bcfd gas, expected to be in the system by the middle of 2015, will help overcome the shortage of gas in Pakistan. The 2,700-km pipeline was originally envisaged to transport Iranian gas to energy-deficient Pakistan and India.

However, India has not participated in talks on the venture since 2008. Pakistan and Iran declared last year that they would go ahead with the project bilaterally if India maintained its stance of not joining the venture.

Analysts said India stand was influenced by security concerns and the high transit fees being sought by Pakistan for gas to be transported through its territory.