Iran and India say they have finalised and signed a $22bn (£12bn) deal for Tehran to supply five million tonnes of gas every year to India.
Its thought that any overland line to Iran will have to transit Pakistan
Officials say that the liquefied natural gas (LNG) will be supplied over a 25-year period from 2009.
The contract was signed between the National Iranian Gas Export Company and three Indian firms - Indian Oil Company, Gail and Baharat India.
The deal was first agreed between the countries this year.
"We managed to agree on a price for the LNG. The exports should begin in 2009 and rapidly reach a level of five million tonnes annually," Iranian Oil Minister Bijan Namdar Zanghaneh said after talks with his Indian counterpart Mani Shankar Aiyar.
Mr Zanghaneh also announced that discussions would continue between the two countries over awarding India exploitation rights in the Jofeir oilfield and 10% of a field at Yadvaran in Khuzestan province of southwest Iran.
"If India accepts increasing the exports of LNG by 2.5 million additional tonnes, its share in Yadvaran will increase to 20%," he said.
India's energy demands, both in oil and gas, are expected to double by 2020 as the country's economy grows rapidly.
The world's second most populous country produces only half the natural gas it uses and currently imports 70% of the crude oil it needs.
Record oil prices in recent months have hit India hard as a result.
When the deal was initially agreed in January, it was estimated to be worth $40bn and India was reported to have agreed to buy 7.5 million tons of gas a year.
An Indian oil official said discussions were still continuing for the extra tonnage.