Iran has agreed to supply natural gas to Pakistan at a discount price while Pakistan has shown its willingness to change certain provisions of draft agreement pertaining construction of 781 km long gasline to be laid on Pakistani side.

The two countries have also agreed to set up an oil refinery at Gwadar port, which will refine 4-lac barrel crude oil per day, the agreement to this effect will be signed during forthcoming visit of President Asif Ali Zardari. Pakistan is also all set to import 10,000 tone per day Liquefied Petroleum Gas (LPG) from Iran.

Last week, crucial talks between Iranian firm Tadbir Energy and Pakistan's Inter-State Gas Systems (ISGS) was postponed due to Pakistan's demand to reduce gas price for Iran-Pakistan gas pipeline to bring it at par with the rates finalised in Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project.

To resolve the minor differences ahead of finalising a deal concerning $1.5 billion Iran-Pakistan gas pipeline project, Iranian Minister for Petroleum Rostam Ghasemi Wednesday called on Adviser to Prime Minister on Petroleum & Natural Resources Dr Asim Hussain here at his residence.

During the meeting, Iranian Minister for Petroleum told the Adviser that Tehran would review the bilateral Gas Sales and Purchase Agreement (GSPA) owing to the persistent demand of Islamabad to reduce price of gas planned to supply to Pakistan by December 2014. Asim Hussain also assured Iranian Minister for Petroleum that Pakistan is agreed to introduce certain changes in the legal points of draft of Engineering, Procurement and Commissioning (EPC) agreement pertaining construction of 781-km-long gasline - to be laid on Pakistani side. And, the signing ceremony of IP gas pipeline project agreement would be held till February 27 expectedly in Pakistan, said a well-placed source in the Petroleum Ministry.

The official further told that high-ups from both the sides have also reviewed five-day long talks held last week between Tadbir Energy and Pakistan's Inter-State Gas Systems (ISGS). Both high-ups reiterated the commitment of two neighbouring states to give a pathetic shoulder to America's pressure seeking to stop the project.

While talking to media at the end of one-day talks on gasline project, Asim Hussain said that signing on the EPC contract of IP gasline project would be made till February 27, 2013 as all technical issues had been resolved and a Pakistani delegation comprising ISGS officials would go to Iran on Wednesday (today) to finalise much-awaited deal. He also said Iran would also construct oil refinery at Gwadar with a refining capacity of four lac barrel per day and signing of the agreement pertaining oil refinery would be done on 27th February when the President Asif Ali Zaradari would be visiting Iran.

Credible sources in petroleum ministry told that in another uniquely unprecedented development, Pakistan has also decided to initially buy 10,000 tons of Liquefied Petroleum Gas (LPG) on daily basis from Iran as Iran has offered a low price of $30/ton of the commodity in comparison to the price of international market. The Iranian LPG would be brought to Pakistan via road and the quantity of importing Irani LPG to the country would be enhanced in second phase, sources added.

Both sides withstood tremendous pressure from US but did not get deterred to back off from their stance. The two sides finally agreed to sign what many duly believe is a monumental agreement. Officials of both sides have duly abided by the greatest responsibility on their shoulders to shrug off the unwarranted pressure.At present Pakistan is scrambling to secure funds for the pipeline project amid US opposition in the wake of sanctions imposed on Iran over its nuclear programme.

The IP gasline project that will be completed by December 2014 will first bring 750 million cubic feet gas per day through 781-kilometre-long pipeline with a diameter of 42 inches, and later on, the gas flow will increase to 1 billion cubic feet per day. The agreement between both brethren states would be functional for 20 years and there would be a five-year extension. Tadbir Energy has already shown its agreement to construct pipeline inside Pakistan.

During the series of talks held last week, the Inter-State Gas Systems and the Iranian firm reached on a unanimous consensus that state-owned SSGCL and SNGPL would initiate mechanical works while the FWO, a subsidiary of the armed forces, would carry out civil works of the project while laying the pipeline from Gabd to Nawabshah inside Pakistan.Cost of installing gas pipeline on a single kilometre and the interest rate have already been settled on fourth day of last week's talks. The cost would stand at Rs190 milion and the interest rate 3 per cent on $500 million loan. Iran had demanded four per cent interest rate on $500 million loan and Pakistan had bargained for three per cent interest rate over the committed loan.

It merits mentioning here that Rostam Ghasemi, also called on President Asif Ali Zardari and PM Raja Pervez Ashraf on Wednesday morning where Dr Asim Hussain was also present.Talking to Iranian Minister, Prime Minister termed agreement as a "leap forward". He also thanked Iran for supplying electricity to Pakistan, which caters to the requirements of Gwadar.Rostam Ghasemi said that Iran and Pakistan enjoy close brotherly relations.

Pakistan and Iran, he said can further expand their ties by expanding their economic relations and leveraging their comparative economic advantages. The Iranian Minister informed the Prime Minister that work on the Iran-Pakistan gas pipeline on the Iranian side is completed. He also conveyed greetings and best wishes of the President of Iran Mahmoud Ahmadinejad to the Prime Minister.