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Iranian president forges gas ties with South Asia
ISLAMABAD (Reuters) - Iran and Pakistan agreed they had settled all issues relating to plans for a $7.6 billion gas pipeline during a visit to Islamabad on Monday by Iranian President Mahmoud Ahmadinejad, Pakistan's foreign minister said.
The project to pipe gas to India and Pakistan was discussed when Ahmadinejad stopped briefly on his way to Sri Lanka to meet Pakistani leaders before flying on for an official visit to Sri Lanka.
"A good thing that came out of the meeting is that both sides reiterated that the gas pipeline will promote peace and friendship between the two countries," Pakistani Foreign Minister Shah Mehmood Qureshi told reporters.
"And they recognized that all outstanding issues have been resolved and Iranian president will soon invite Pakistani president to visit Tehran where an agreement will be signed."
If all goes well, construction could start next year and the pipeline, linking the world's second largest gas reserves to the fast growing South Asian economies, could be completed by 2012.
It would initially transport 60 million cubic meters of gas (2.2 billion cubic feet) daily to Pakistan and India, half for each country, but capacity would be raised later to 150 million cubic meters.
Pakistani officials also proposed another pipeline project, to carry gas from Iran to China, during Monday's talks.
During a visit lasting just a few hours, Ahmadinejad met President Pervez Musharraf before holding talks with new Prime Minister Yousaf Raza Gilani, whose government was sworn in a month ago.
The visit came hard on the heels of talks between the Indian and Pakistani oil ministers. The Pakistani minister said terms, such as transit fees, could be finalized in days or weeks.
Ahmadinejad was due to arrive in India on Tuesday.
The project has been discussed for years, but was given a new lease of life after India and Pakistan embarked on a peace process in 2004.
Pakistan and Iran have previously said they would go ahead with the project even if India opted out. New Delhi had dropped out of trilateral talks in mid-2007, saying it wanted to resolve issues with Pakistan first.
The project has been dubbed the "Pipeline for Peace and Progress" because of the mutual benefits it will bring to India and Pakistan, two countries that have fought three wars since they were divided by the partition of India in 1947.
The United States has tried to discourage India and Pakistan from any deal with Iran in the past because of Tehran's suspected ambitions to build nuclear arms. Iran denies any such ambitions.
Desperate for new sources of energy to fuel their burgeoning economies, India and Pakistan last week signed up for another multi-billion dollar pipeline project to carry gas across the mountains of Central Asia from Turkmenistan through Afghanistan.
Ahmadinejad's visit to Sri Lanka came as President Mahinda Rajapaksa's government, increasingly isolated with criticism from the Western countries over its human rights record, sought to strengthen ties with Asian countries.
A 25-year civil war in Sri Lanka has killed more than 70,000 people
Hours before he arrived in Colombo to inaugurate a $450 million hydroelectric power plant financed by Iran, Sri Lanka's national power grid crashed for the second time in a month, officials said.
Iran is providing Sri Lanka with a $1.5 billion loan to fund infrastructure projects, including the 100 megawatt power plant as well as projects to triple the island's oil refinery capacity.
(Additional reporting by Ranga Sirilal in Colombo; Editing by Bill Tarrant)
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