WASHINGTON, Jan. 31 (UPI) -- India's decision to proceed with talks with Pakistan on transit fees for the $7.4 billion, 1,700-mile natural gas pipeline from Iran is fraught with strategic and diplomatic implications.

Talks have been deadlocked for months on two issues: the cost of Iranian gas and how much India will pay Pakistan in transit fees. The pipeline would supply both countries with gas: India with 90 million cubic meters per day and Pakistan 60 million cubic meters per day.

Indian Petroleum and Natural Gas Minister Murli Deora is expected to visit Pakistan next week to discuss the transit-fee issue. If all goes well, the three countries involved -- Iran, Pakistan and India -- will meet in Iran Feb. 12 or 13 for discussions that could seal the deal.

India and Pakistan are split on how much New Delhi will pay Islamabad for the use of Pakistani territory for the passage of the pipeline. India says it will pay 20 cents per million British thermal units; Pakistan wants 49.3 cents per mBtu. The two sides have an agreement on the transportation tariff for the gas, however. Then there is the price of Iranian gas. By the time it comes to India, the gas will cost more than $7 per mBtu -- because of the transit fees -- a price New Delhi says is too high.

Economically rising India has little choice, however. With few exceptions, it has been unable to secure long-term supply contracts, forcing it to pay more for gas on the spot market. Countries such as Iran and Myanmar, which face international isolation, seem to be the only options to secure long-term contracts. There, too, India faces stiff competition from China, which needs energy to fuel its own rapid economic growth.