The final structure of the Iran gas pipeline project will take shape by mid-2006 with the signing of a framework agreement, paving the way for gas flows four years later to India and Pakistan, a top Pakistani official said Friday.

Describing the third meeting here Friday of an India-Pakistan joint working group on the project as "very constructive and proactive", Pakistan's Petroleum and Natural Resources Secretary Ahmad Waqar expressed hope the talks would move into the trilateral mode by the first quarter of 2006.

"The project structure should take concrete shape by the middle of next year. We plan to hold trilateral talks with India and Iran hopefully by the first quarter of next year in Tehran," Waqar said.

"This would be followed by ministerial level meetings when the tripartite agreement will be sorted out," Waqar told at the close of the first day of talks with an Indian delegation led by Petroleum Secretary S.C. Tripathi.

Leading a seven-member team including representatives of Sui Gas, Pakistan's largest public-private integrated gas company, Waqar discussed a wide range of issues with Indian officials including the project structure, quality and quantity of gas to be imported from Iran, the project's build-up period, gas pricing, insurance of gas and pipeline as well as transit fee.

Waqar assured that international best practices would be adopted in framing the principles for the transit fee that India would have to pay Pakistan for delivery of Iranian gas at its frontier.

"We have reached a broad agreement and need to work more on the project structure to refine it," said Waqar.

"By mid-2007 we should have everything in place. As the construction of the pipeline will take three years, we expect gas would flow by mid or end of 2010."

Pakistan's views are in harmony with India's official views that once the three sides reach a framework agreement, the project will become a commercial venture by mid-2007 and the governments may not have to be involved.

Waqar revealed that besides the Russians, several Chinese companies had approached Pakistan for participation in building the pipeline.

On the gas front, Waqar said Iran had indicated that only dry or lean gas minus liquefied petroleum gas (LPG) would be offered to India and Pakistan.

Unlike India, which is appointing different consultants to advise on technical, finance and legal aspects of the multibillion-dollar project, Pakistan has chosen a consortium approach and will have one consultant to advice it on all aspects.

"We are in the process of finalising the consultants and have short listed PricewaterhouseCoopers and Lazard Brothers. We hope to finalise this by next week," a senior member of the Pakistani delegation said.

The third round of India-Pakistan talks are to be followed by another round of bilateral talks between India and Iran later this month.

Indian officials involved in the talks feel it will take at least another four to six months before the three countries are able to raise the dialogue to the trilateral level.

"Pakistan is already working on various routes and options for ensuring a safe and economic pipeline," said A. Rashid Lone, managing director of Pakistan's Inter State Gas Systems Pvt Ltd, a joint venture of Sui Gas Northern Pipelines Ltd and Sui Southern Gas Company Ltd.

Looking to source about 60-90 million standard cubic metres of gas a day (MMSCMD), India has been advised by financial consultants Ernst & Young to participate in the project.

Pakistan too is likely to participate in the project as it looks to import 30-50 MMSCMD of gas.