Pakistan and Iran signed a “sovereign guarantee” agreement on Friday in Islamabad to build $7.5 billion gas pipeline within four years without India and despite US pressure.

Pakistan petroleum minister Syed Naveed Qamar said that initially it was a joint project between Pakistan, Iran and India but India withdrew from this project last year.

The 900-kilometre (560-mile) pipeline will run between Iranshahr, near the border with Pakistan, to Asalooyeh, in southern Iran. The pipeline will transport natural gas from Iran’s South Pars field.

Syed Naveed Qamar told the press, “I am extremely pleased that after 17 long years this project is finally starting. It would help us generate energy for our industrial growth”.

“Iran had assured us that they would complete the (900 kilometre pipeline) project between two-and-half to three years, ahead of schedule.” Qamar added.

Pakistan will use the imported gas for the power sector. A petroleum ministry statement said that electricity generation through gas, in comparison with other fuels would generate “significant” yearly savings.

Project is ready for implementation now as all the required conditions have met, and as per execution schedule the gas pipeline will be operational by the end of 2014. The capital cost for the Pakistani side of pipeline is $1.65 billion.

According to the ministry statement supply is contracted for a period of 25 years and it is renewable for another five years.