At a meeting between Bangladesh's visiting Foreign Minister M Morshed Khan and Indian Petroleum and Natural Gas Minister Mani Shankar Aiyar in New Delhi, India put 60,000 tonnes of diesel a month from next year on offer.

"We are looking at the potential for larger cooperation (with India) as our requirement (of diesel) is going up. I will leave it to the officials to discuss an import contract," Morshed told reporters after the meeting.

India is willing to supply 0.7 million tonnes diesel a year on a five-year contract beginning in 2005.

The state-run Indian Oil Corporation is supplying 230,000 tonnes of diesel to Bangladesh Petroleum Corporation (BPC) over April-December this year.

Morshed, now on a goodwill visit to India, said: "If we have exportable surplus, if Bangladesh (ever) exports natural gas, India is the natural choice because of the proximity."

US energy firm Unocal, which proposed exporting gas from Bibiyana field in northern Bangladesh by pipeline to India, was forced to redraw its plans as Dhaka refused to allow exports.

The company now plans to supply 200 million cubic feet a day to the domestic market by 2006.

Bibiyana, which holds about 5.5 trillion cubic feet of gas reserves, does not produce any gas at present.

"They (Bangladesh) have to decide if they have exportable surplus. Whenever they reach such a decision, they will have no objection to exporting gas to India," Aiyar said.

Asked how soon Bangladesh will be able to assess its gas reserves and exportable surplus, Morshed said, "When we find out."

He also rubbished the numerous studies carried out to establish Bangladesh's gas reserves saying "studies cannot give you gas, only real drilling gives."

Aiyar also raised the issue of using Bangladesh as the transit route for transporting India's share of gas in the gigantic A-1 field in offshore Myanmar.

To this, Morshed responded, saying Bangladesh had no objection to a pipeline travelling through its territory if constructed on mutual beneficiary terms indicating Dhaka's keenness in levying a transit fee on the pipeline.

RIVER INTERLINKING

On the interlinking of rivers, Indian Water Resources Minister Priyaranjan Dasmunsi assured Morshed that nothing would be done to the detriment of Bangladesh.

"Sharing of water resources is as much a concern to India's eastern region as to Bangladesh," he said, adding all issues relating to water share would be resolved amicably.

Morshed had also a 15-minute courtesy call on former Indian prime minister Atal Behari Vajpayee.