Iran and India have signed a "heads of agreement" for their ambitious pipeline project designed to transport natural gas to this country via Pakistan. 

Alongside Iran's deal with India Monday in Tehran for supply of five million tonnes of liquefied natural gas (LNG) from 2006, "the heads of agreement for the gas pipeline project has been signed targeting the project takeoff by Dec," a senior delegation member accompanying Petroleum Minister Mani Shankar Aiyar told IANS from Dubai.

"Under the heads of agreement, India and Iran have agreed to evolve a world class safe and secure energy project," the official said.

A non-binding document outlining the main issues relevant to a tentative partnership agreement, the heads of agreement will resolve the key claims and issues related with the project.

To resolve the financial, technical, legal and commercial issues related with the estimated $4.5-billion project, India and Iran have set up an official level special joint working group, which will hold the first meeting here on June 23-24.

Thereafter the India-Pakistan joint working group formed earlier this month will be holding its meeting here in July. This would be followed up by the visit of the Pakistani petroleum minister in August.

Iran and Pakistan are also scheduled to hold ministerial level talks later this month in Islamabad.

The Iran LNG deal finalised by a consortium of Indian state-run firms and the National Iranian Gas Export Company (NIGEC) has opened several avenues for India including providing state-owned ONGC Videsh Ltd the first full operatorship of an exploration block - Juffier, and 10 percent stake in a producing field Yadavaran.

India had been seeking 20 percent stake in the Yadavaran field but was able to get only 10 percent stake as the remaining 10 percent has been tied up with the expected conclusion of the deal for another 2.5 million tonnes of LNG from Iran by first quarter of 2006.

"The 10 percent stake in Yadavaran and 100 percent operatorship of Juffier will yield 30,000 barrels per day (bpd) each for India," the official said.

Various proposals of state-owned Indian companies keen to undertake petrochemical, refinery and gas projects are still being examined.

On reports of India having agreed to pay a higher price for LNG from Iran as against the long-term contract it has with Qatar, the official said there has been considerable change in scenario since the time the earlier deal was negotiated.

As against below $30 price of crude oil when the Qatar gas deal was finalised the crude prices are currently hovering over $50 per barrel.

"We have been able to secure the five million tonnes LNG at competitive price. More importantly, unlike in the Qatar deal, in this case we have been able to secure participation in Iran's hydrocarbon sector through the operatorship of Juffier and 10 percent stake in Yadavaran," the official said.

"The terms and conditions for additional 2.5 million tonnes of LNG from Iran would be discussed by a joint working group, which will target arriving at a decision by first quarter of 2006."