WASHINGTON, June 12: Pakistan is believed to have informed the United States that it cannot abandon the Iranian gas pipeline project despite a strong US opposition to the scheme, diplomatic sources told Dawn. The project was discussed in detail at a meeting between Foreign Minister Khurshid Mehmood Kasuri and US Secretary of State Condoleezza Rice in Washington on Friday.

Ms Rice, who has publicly opposed the project, reiterated Washington’s position that the proposed pipeline, which will be bringing Iranian gas to India through Pakistan, is against US laws.

The US Iran and Libya Sanctions Act of 1996, known as ILSA, forbids more than $20 million of investment in Iranian oil and gas projects. The violator can be deprived of US economic assistance and may also face sanctions.

During the meeting Ms Rice is believed to have argued that even if the US administration gave up its opposition to the pipeline, there were powerful groups in Congress, media and academia that would continue to oppose the project and it will ultimately adversely affect Washington’s relations with Islamabad.

Pakistan’s response, conveyed by Mr Kasuri, covered both the economic and political aspects of the proposed deal. Pakistan argued that it would earn up to $600 million a year from the pipeline, which is close to about $700 million a year Islamabad receives from Washington.

The pipeline will also allow Pakistan to import about $1 billion of gas every year from Iran. As Indian oil minister Mani Shankar Aiyar pointed out during his recent visit to Islamabad, Pakistan will have to import gas by 2010 to meet its domestic and industrial requirements.

Pakistan already consumes more per capita energy than India and has a high domestic consumption. In Pakistan, domestic users consume more energy than both industrial and agriculture users who are second and third on the list.

In India, agriculture has the highest consumption of energy, followed by industrial and domestic users.

The pipeline will also create a major industrial infrastructure in Pakistan, generating new jobs.

Pakistan also pointed out that the Iranian pipeline to India will have a major political impact on South Asia and will add a huge economic incentive to the ongoing peace process between India and Pakistan.

Both are major reasons for Islamabad to opt for the Iranian project, the Pakistanis argued.

Responding to Pakistan’s concerns, Ms Rice is believed to have urged the Pakistani delegation to look at other options as well, such as bringing a pipeline from Qatar or the Central Asian republic of Turkmenistan.

Pakistan said that bringing gas from Qatar would double the cost while gas reserves in Turkmenistan are still unproven. Political instability in Afghanistan is another cause for concern that will need to be sorted out before a pipeline is routed through that country.

Despite this frank and bold response, there are concerns in the Pakistani camp that annoying America over the project could have serious economic and political consequences for the country.

Pakistan is a major recipient of US economic assistance. Recently, Washington has also resumed military assistance to Islamabad and in March agreed to sell the much-needed F-16 fighter jets to the Pakistan Air Force.

India, the major partner and the beneficiary of the gas pipeline, receives only $25 million of annual humanitarian assistance from the United States and still buys its weapons from Russian and European sources.

Wary of the obvious consequences of annoying America, Pakistan is trying to convince the Americans that it will not be violating any US law by agreeing to build the Iranian gas pipeline. Pakistanis say that they will not make any investment in Iran’s oil infrastructure, which ILSA forbids. The Iranian side of the project will be financed entirely by Iran and a group of multi-national investors Iran will be required to put together.

Pakistan’s investment into the project will start only after the pipeline reaches the Pakistani territory.