ISLAMABAD, Jan 24: Pakistan and Iran on Tuesday agreed to continue two-track negotiations — bilateral and also involving India — for materializing the multi-billion dollar gas pipeline project.

The two countries resolved at a two-day joint working group meeting to implement the project on a stand-alone basis even if India opted to stay away, notwithstanding external pressure owing to its economic benefits.

“We have informed the Iranian side that we have not abandoned the bilateral project,” said advisor to the prime minister on energy Mukhtar Ahmad.

He told reporters that international sanctions against Iran could be technically avoided by developing the project in a segmented manner as Iran could develop the project in its territory and India on its side. There are many sources of financing in this region, he said.

Asked what would be Pakistan’s position on the gas pipeline with Iran if the United States offered cooperation in nuclear energy, the prime minister’s advisor said “nuclear energy cannot be a substitute to natural gas,” and added the pipeline was in the interest of both countries.

Mr Ahmad said Pakistan had informed the Iranian side that it would not abandon the option of a bilateral project and go ahead with it whether or not India joined it.

He said segmented construction of the pipeline could be a way of sidestepping US sanctions and added that there was no security issue related to the project.

The two sides reported progress in their talks on project structure, framework agreement, gas pricing, feasibility study, and gas sales and purchase agreement of the Iran-Pakistan-India (IPI) gas pipeline project.

The two sides agreed that a bilateral joint working group meeting will be held in Tehran in March which will be followed by a tripartite meeting of Iran, Pakistan and India at a joint working group level. Both sides also agreed to hold a trilateral ministerial meeting in April 2006 in Tehran to sign a tripartite framework agreement.

Speaking at a news conference on the conclusion of a two-day meeting of the joint working group, Pakistan’s Secretary Petroleum Ahmad Waqar said the two sides reviewed the project in detail and took various decisions to take the project forward.

He said the meeting discussed the project structure, framework agreement, principles of gas-pricing mechanism, feasibility study, and gas sales and purchase agreement and decided to continue talks on bilateral as well as on trilateral basis.

He said Iran had agreed to constitute a technical sub-group of the joint working group to discuss technical issues with similar technical sub-groups already established by India and Pakistan.

He said the project was making progress and hopefully a tripartite framework would be signed in Tehran shortly that would be a real stepping stone for starting fast-track implementation of the project by the middle of 2007.

Mr Waqar said Pakistan was vigorously pursuing Turkmenistan-Afghanistan-Pakistan and IPI projects because Pakistan’s energy requirements were rising and gas was the cheapest source of energy, and added that a Pakistani delegation would be visiting Ashkabad next month to push the project forward.

Iranian deputy minister for petroleum Nejad Hossenian said the two sides had agreed that the principles of gas price should be transparent, indicative of the real prices of gas in the market and not influenced by political events. However, he said the issue required more discussions.

To another question, he said two options were being examined for the implementation of the project, including a segmented approach and an integrated approach, and added that the first option might have less political implications. The issue, he said, needed to be studied further and would be discussed again in the next meeting.

Responding to another question, he said the project was a pipeline of security and peace in this South Asian region and was necessary for its economic progress.

Responding to a question on the impact of possible UN sanctions, he said it would depend what were the UN sanctions and how they put it, but hopefully the three parties would go ahead with the project.

He said the gap between energy supply and demand in India and Pakistan was rising so quickly that both countries would require gas, otherwise they would have to depend more on the oil market which was already in a bad shape.

Both sides also issued a joint statement that said the deliberations focused on all important technical, financial and commercial issues related to the IPI project. Both sides noted with satisfaction that negotiations at the bilateral working group level between Pakistan and Iran provided a mechanism to make progress on all related aspects of the project so that substantive and concrete progress could be achieved.