Iranian president forges gas ties with South Asia

By Kamran Haider

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.