TEHRAN, Iran (CNN) -- Iranian President Mahmoud Ahmadinejad heads to Pakistan and India this week to put the finishing touches on a controversial deal to build a pipeline that would deliver Iranian gas to both countries, Iran's semi-official Fars news agency says.

Iranian President Mahmoud Ahmadinejad waves as he arrives Monday in Islamabad, Pakistan.

Ahmadinejad arrived in Islamabad on Monday for a four-hour visit with newly elected Prime Minister Reza Gilani and President Pervez Musharraf, according to Pakistan's information ministry. Later in the day, he heads to Sri Lanka before traveling to New Delhi late Tuesday for a short visit, according to Iran's state-run news agency IRNA.

The pipeline, if built, would be about 2,700 kilometers (1,674 miles) long.

Pakistan and India, both key U.S. allies, are under pressure from the United States not to sign any kind of agreement with Iran.

Some observers have called the project "the peace pipeline" because of its perceived impact on reducing tension between India and Pakistan, nuclear neighbors that have fought three wars, two of them over the disputed Kashmir region. Watch Ahmadinejad arrive in India »

The gas pipeline project, which has been in discussions for over a year, is aimed at supplying Iranian natural gas to Pakistan and India. The pipeline would run from Iran to India, cutting through Pakistan.

According to Fars, Ahmadinejad's visit comes after Pakistani and Indian energy ministers signed an agreement last week, once they had resolved a major "bone of contention" regarding the route of the gas pipeline.

"Now that all sides have calmed down, President Ahmadinejad will discuss the 'Peace Pipeline' at the highest levels during his visit to the Sub-Continent," Fars said.

Under the agreement, the pipeline will run through 1,100 kilometers (682 miles) of Iran, 1,000 kilometers (620 miles) of Pakistan and 600 kilometers (372 miles) of India, according to Fars.

"The pipeline will be capable of daily transporting 150 million cubic meters of gas to Pakistan and India -- 90 million cubic meters will go to India and the rest will go to Pakistan," Fars said.

"The pipeline project was initially estimated to cost $4.5 billion, but the cost has been revised to around $7 billion."

The United States recently tried to scuttle the pipeline by offering India advanced nuclear technology to make up for the loss of Iranian gas. But Fars reported that India recently declared its readiness to participate in the discussions on the pipeline after more than a year.

China -- Iran's largest trade partner followed by India -- has previously said that it would negotiate in India's place if New Delhi withdraws from the project, according to Fars. China borders Pakistan to the north.

A top adviser to the Iranian president spoke on the eve of Ahmadinejad's visit about the importance of oil and gas when it comes to putting Western powers "in their place," according to Fars.

"Oil and gas are two elements of power at the disposal of the Muslims," Gen. Yahya Safavi said Sunday, according to Fars.

"If it (the power) be viewed properly (with wisdom) and within the framework of the interests of Islam and Muslims, one can then put the hegemonic powers back in their place." E-mail to a friend

CNN's Shirzad Bozorgmehr in Tehran and Zein Basravi in Islamabad contributed to this report.

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