Iran has already constructed more than 900 kilometers of the pipeline which is to carry 21.5 million cubic meters of natural gas per day from Iran to its eastern neighbor.
The first part of the pipeline will carry natural gas from Iran's South Pars gas field in Asalouyeh to the southeastern city of Iranshahr.
The chief executive of Iran's National Gas Company, Javad Ouji, said Iran will start on Monday building the next 400-kilometer leg of the pipeline from Iranshahr to the Pakistani border, through the Iranian port of Chabahar, Shana reported.
The pipeline, dubbed the Peace Pipeline, originally would have extended from Pakistan to India, but New Delhi pulled out of the project last year.
Pakistan's Deputy Energy Minister Kamran Lashari, who was present at the signing ceremony along with Ouji, said the construction of the Pakistani section of the pipeline will begin after completing a one-year feasibility study.
He added that it would then take three years to build the 700-kilometer pipeline from the Iranian border to the Pakistani city of Nawabshah.