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Dealing with Iran encourages its nuclear plan: US

Posted on: Monday, 24 April 2006, 02:16 CDT

DOHA (Reuters) - Conducting business with Iran encourages its nuclear ambitions, said U.S. Energy Secretary Sam Bodman on Monday when asked for his reaction to a $7 billion gas pipeline deal between Iran, Pakistan and India.

"Doing business with Iran, it seems to me, at a certain level encourages this," he told a news conference, referring to Iran's nuclear program.

The oil ministers of Iran, Pakistan and India told Reuters on Saturday they were very near a final agreement on a planned gas pipeline to pump Iranian gas to India, in defiance of U.S. opposition. Iranian Oil Minister Kazem Vaziri said he expected the final deal to be signed in Tehran in June.

Bodman said he would meet with Indian oil minister Murli Deora, also attending the International Energy Forum in Doha.

The project to pump Iranian gas to India through Pakistan was first proposed more than a decade ago, but progress has been slow because of hostility between India and Pakistan and, more recently, U.S. opposition to Iran over its nuclear work.

The pipeline would link Iran's abundant gas reserves, the world's second biggest, to India's booming economy.

Bodman said record oil prices of around $75 were causing great "dislocation" in the United States and the rest of the world but there was little producers could do.

"We have encouraged producing nations to keep oil markets well supplied -- I think they've done that. I would encourage them to do more if they can," he said. "We are in a situation where supply is roughly equal to demand today."

OPEC ministers were due to meet in Doha later on Monday. They are expected to keep their 28 million barrels per day output limit unchanged because they are already producing as much oil as refiners can process.

The United States uses a quarter of the world's oil and over 40 percent of its gasoline. Bodman appeared to dismiss a suggestion by the International Monetary Fund that Washington should up fuel tax, among the world's lowest, to stem demand.

"There is not a lot of sentiment in Washington to raise gasoline taxes," he said.

The United States faces supply disruptions in some states due to a switch to an ethanol mix in its motor fuel and concern over shortages have helped push oil prices upwards.

(Reporting by Deepa Babington, Doha newsroom)

Source: REUTERS

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