KUWAIT CITY (AFP) - Kuwait and its Persian Gulf neighbor Iran will sign an agreement on Saturday to supply the desert emirate with fresh water through a pipeline, Kuwait's energy minister said Tuesday.

"I will lead a high-level delegation to Iran next week to sign an agreement for supplying Kuwait with fresh water from Iran," Sheikh Ahmed Fahd al-Sabah said, quoted by the KUNA news agency.

KUNA said the visit would take place on Saturday.

The two countries signed a memorandum of understanding on the issue in January during a visit by Kuwait's Prime Minister Sheikh Sabah al-Ahmad al-Sabah, who was then the foreign minister.

According to the agreement, Kuwait will get 200 million imperial gallons of water daily, Sheikh Ahmed said, without providing the financial details of the agreement.

Earlier reports have said the project foresees building a pipeline to channel water from the Karun and Karkheh rivers in southwestern Iran to Kuwait at a cost of two billion dollars. The Kuwaiti minister said the project is "vital" for Kuwait and is classified as "one of the highly important strategic projects."

Negotiations between Tehran and Kuwait City on the project began more than two years ago, when former Iraqi president Saddam Hussein was still in power.

According to initial plans, the pipeline will extend 330 kilometers (206 miles) across Iranian territory and then via a 210-kilometre (131-mile) pipeline under the Persian Gulf to Kuwait, thus avoiding Iraqi territory.

Kuwait depends almost entirely on seawater desalination for its fresh water requirements, which is sold to consumers at heavily subsidized prices.

The oil-rich emirate produces around 300 million imperial gallons of desalinated water daily and consumes almost all of it.

The two countries are also locked in negotiations for exporting natural gas to Kuwait after signing a memorandum of understanding in January.