To increase bilateral trade between India and Pakistan, Islamabad offered to sell Iranian gas to India. India has huge demand for natural gas and it is unable to keep up with the increasing demand for natural gas.

Pakistan’s Prime Minister Shaukat Aziz at a meeting with Petroleum Minister Murli Deora in New Delhi on April 3 offered to buy 60 million standard cubic meters per day of gas from Iran and will sell half of it to India at the Indo-Pak border.
India’s exports to Pakistan constitute about 8 per cent of its total exports to South Asia. But Pakistan’s exports to India are about 40 per cent, during 1998-2000, of Pakistan’s total exports to South Asia. In the case of imports, 0.8 per cent of India’s imports originate from South Asia and it is 0.5 per cent in the case for Pakistan.
In spite of all the hurdles bilateral trade in increasing day by day and it is profitable for both of the countries because of low cost of transportation.

This trade agreement could be of great importance for India because India will not have to deal directly with Iran, which faces UN sanctions over its nuclear program. Second plus point for India is that it will not have to worry about the security of the 1,035-km long gas pipeline, crossing the lawless Afghanistan and Pakistan’s tribal areas.

Iran expected to sell natural gas to India and Pakistan at 4.93 dollars per million British thermal unit (at 60 dollars per barrel crude oil price) and Pakistan wants a transit fee of 0.49 dollars per mBtu, which is about 10 per cent of the gas price. With transportation tariff of 1.57 dollars per mBtu, the delivered price of gas would go up to 7 dollars per mBtu at India-Pak border.

Via: hindu.com