Mumbai: India and Pakistan have reached an understanding on the transportation tariff and transit fees for the long-delayed Iran-Pakistan-India gas pipeline project and the two countries expect work on the project to start next year.

We are just "days or weeks away" from finalising terms for a cross-border pipeline to import gas from Iran, Indian oil minister Murli Deora and his Pakistani counterpart Khawaja Muhammad Asif told a joint press conference after discussing the issues.

The two ministers said they have reached consensus on basic issues for building the gas pipeline and hope to start work on the $7.5-billion project next year.

They said they have reached a broad agreement on principles for deciding the transportation tariff and transit fee, the two key issues that had held up the finalisation of the 2,600-km pipeline.

"We have agreed upon the fundamentals of the agreement," Asif said, adding, "The whole process should not take a long time, may be few days or few weeks and the agreement will be concluded."

"We have reached agreement on the principles on which we hope the project can go ahead. India believes that close economic cooperation with its neighbours is not only a necessity, it also builds the stakes and trust that strengthen the overall relationship," Deora said.

The two ministers also refuted reports about US reservations on the project as it involves Iran.

The breakthrough came a day after India joined Pakistan and Afghanistan in setting up a gas pipeline from Turkmenistan in another multi-billion ADB-sponsored project to pipe gas across the mountains of Central Asia to South Asia.

While construction for the Turkmenistan pipeline project is expected to start in 2010, building the pipeline from Iran is seen beginning next year, and could be finished in 2012.