Iran warned on Sunday that oil prices could be substantially high if the United Nations slapped sanctions on the country for its nuclear program.

"Any action like that will increase oil prices very high. And I believe that U.N. or its bodies will not put any sanctions on oil or oil industry," Iranian Deputy Minister of Petroleum for International Affairs Dr. H. Nejad Hoseinian told a news conference here at the conclusion of three-day talks with Pakistani officials.

"I do not think any body could put any sanction on oil industry and gas industry," Hosenian said when asked what would be the future of the multi-billion-dollar Iran-Pakistan-India gas pipeline project.

Ahmad Waqar, secretary of the Pakistan Petroleum Ministry, who led the delegation in talks with Iran, also played down the threat of sanctions and said that Pakistan was dealing with the project in view of its energy requirements.

"Pakistan is viewing the project keeping in view its national interests. There are our energy requirements. We need energy for sustaining economic growth and the decisions taken by our leadership is based on that," Waqar told the news conference with the Iranian deputy oil minister.

"We hope substantial progress achieved ahead of the ministerial meeting in June," he said.

According to a statement issued at the press conference, both sides at the 7th meeting of the Iran-Pakistan Joint Working Group (JWG) on Iran-Pakistan-India (IPI) agreed to make immediate efforts for concluding the bilateral arrangements.

The JWG examined in detail various financial, commercial, technical and legal aspects of the project. Major issues discussed at the working group meeting included gas pricing formula, project structure, project feasibility, gas off-take volumes and gas sales and purchase agreement.

Iran agreed to enhance off-take volumes of gas for Pakistan from 2.1 billion cubic feet per day (bcfd) to 2.8 Bcfd in case the project is implemented bilaterally, the statement said.

The two sides resolved that the contracts and agreements for the projects would be developed and finalized expeditiously.

The statement said that both sides agreed to develop a Joint Declaration Document signifying the commitment of both the governments to the Project for signature in the joint ministerial meeting in June 2006 in Tehran.

Both sides reaffirmed to try to develop the gas pipeline project by adopting international best practices and standards.

The next JWG meeting will be held in Islamabad on May 25, 2006. Petroleum ministers of both the countries would meet in Tehran in June 2006 on mutually agreed date to sign a joint declaration of the project.

"If India does not join this project, then we can go ahead on bilateral basis by Iran and Pakistan," he said.

He said there could also be a possibility of two parallel pipelines coming, meeting India requirements as well as Pakistan's requirements.

"Things still have to be sorted out at bilateral levels," he said.