Zardari cancels Iran gas pipeline talks A planned visit to Tehran by Asif Ali Zardari, Pakistan's president, to seal a $1.5bn gas pipeline deal to alleviate the country's critical energy shortage was unexpectedly cancelled at the weekend amid mounting US objections to the contract. Iran has offered Pakistan hundreds of millions of dollars to finance the long-delayed gas pipeline, according to both governments. An increasingly desperate Pakistan, however, is struggling to overcome strong opposition to the project from its US ally, which has applied economic sanctions against Tehran over Iran's suspected nuclear weapons programme. It's a feasible project for Pakistan. It's the quickest route, the cheapest route where we can fulfil our energy needs," Asim Hussain, chief adviser on oil and natural resources to Mr Zardari, said. Mr Zardari had been due to arrive in Tehran on Friday to finalise the agreement. Negotiations were reaching a critical point, according to Mr Hussain, because it would take two years to build the Pakistani sections of the pipeline and Pakistan would have to start paying Iran for the gas two years from now under a "take or pay" contract, whether it received any gas or not. Pakistan would be paying $200m a month under the contract, which links the gas price to the cost of Brent crude oil, he said. "They have offered us $500m to build the pipeline," said Mr Hussain, although he added: "We are discussing about the sanctions . . . Transactions with Iran, with certain banks, is a problem. Mahmoud Ahmadi-Nejad, Iran's president, visited Islamabad last month to offer the financing, and one Iranian official who travelled with him said this would be "just the first instalment." The official said: "If our Pakistani brothers show the right type of determination and seriously go ahead with this project, of course we are prepared to offer more money." According to Mr Hussain, Pakistan currently needs 8bn cubic feet of gas per day, but is producing only 4.2bn and has no facilities to import liquefied natural gas. The Iranian gas would be used to generate power, and would help ease electricity shortages so severe that they prompted big public protests in the country's main cities earlier. Plans for the Iran-Pakistan pipeline - which was at one time designed to be extended to India before New Delhi withdrew under pressure from Washington - were first drawn up decades ago. The US is pushing an alternative gas route known as Tapi (Turkmenistan-Afghanistan-Pakistan-India), but it would face security obstacles at least as serious as the Iran-Pakistan pipeline would confront in the restive Pakistani province of Baluchistan. One Pakistan-based foreign diplomat said that the Iran-Pakistan pipeline had acquired "a sort of totemic status" and that "the emphasis on it is a sign that there are real problems with energy here." Some western governments suspect that Pakistan is attempting to extract aid from the US in exchange for complying with the sanctions against Iran - although Pakistan needs gas more than it needs money, and any financial compensation could theoretically be used to pay Iran under the terms of the gas contract. As one senior Pakistani official said: "If they [the Americans] tell us, "Don't do this," they have to give us an option, they have to give us an alternative, or pay the [monthly] $200m." Iran played down the cancellation of Mr Zardari's visit, blaming the Pakistan president's busy schedule. Ramin Mehmanparast, foreign ministry spokesman, said Iran had agreed to invest at least $250m in the project: "God willing, the future talks between officials of both countries will lead to final agreement." Additional reporting by Monavar Khalaj in Tehran