The United States, which this month signed a nuclear trade deal with India, opposes the plan that would bind its main rival, Iran, with key allies in the region. Proponents of the deal counter that it could improve security by boosting relations in the often volatile region – and have even dubbed the proposal the "Peace Pipeline."
"Washington has minced no words saying that they are completely opposed to the pipeline deal," says Tariq Fatimi, a former Pakistani ambassador to the United States who is now a consultant with a Pakistani energy exploration company.
Now that India has signed a nuclear deal with the US, he says, it would be more inclined to support American policy in the region, which might mean pulling back from such deals with Iran.
Despite the US nuclear deal, India has not pulled out of IPI discussions. Iran and Pakistan also remain supportive of the deal. Two days after the US-India nuclear deal was finalized, Iranian Foreign Minister Manouchehr Mottaki met his Pakistani counterpart in Islamabad and confirmed that the two countries would now begin work of the pipeline bilaterally.
"India may join the project whenever it is ready for this," the Iranian foreign minister said.
A 'Peace Pipeline'
Ismat Sabir, editor of the trade magazine Energy Update in Karachi says it would be "a win-win situation for everyone."
The three large Asian countries could become comfortably interdependent she explains, which would encourage trust in a region where neighborly relations have often been hostile.
"Iran will sell its gas over land to a major consumer, Pakistan will get some hefty transit fees, and India will finally start to meet its energy demands," she continues.
US urged to reconsider its position