Islamabad offered a German engineering company a deal to start work on the Pakistan section of a natural gas pipeline from Iran, an official said.
Iran is keen to build a natural gas pipeline from the South Pars natural gas field in the Persian Gulf to its eastern neighbor, which is struggling to cope with a lingering energy crisis.
An official in the Pakistani energy ministry said Islamabad has offered $250 million to German company ILF Engineering to lay the pipeline inside Pakistani territory, Pakistan's news agency The Nation reports.
Iran has started work on its section of the pipeline. Each country is responsible for its own construction aspects, an insider was quoted as saying on condition of anonymity.
Pakistan has moved closer to the Iranian project despite US objections.
U.S. Secretary of State Hillary Clinton testified before a US House of Representatives appropriations subcommittee there would be "consequences" if Pakistan went ahead with the Iranian option.
Pakistani authorities suggested land surveys were under way for their part of the pipeline. ILF Engineering had no information available on a possible role in the natural gas pipeline.