Energy cooperation in South Asia presents tremendous potential for the development of regional resources in an integrated manner by exploiting the complementarities and optimal utilisation of available resources. Much will depend on how South Asia benefits from its proximity to south western and central Asia to meet its gas and oil needs. But the real issues are of political economy - both at inter and intra-regional levels - further liberalisation, the deregulation of an inefficient energy sector, attracting foreign investment, and developing an integrated infrastructure for production, transmission, and gas pipelines at a regional scale.