Iran signs major gas deal with Austria's OMV: reports

TEHRAN Sat Apr 21, 2007 5:46am EDT

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TEHRAN (Reuters) - Iran signed a major gas development and production agreement with Austrian energy group OMV on Saturday, official Iranian media reported.

State radio estimated the total value of the deal at $18 billion but other Iranian media did not mention any figures.

OMV officials in Tehran declined comment on the reports, saying information would be made available later on Saturday.

Iran sits atop the world's second-largest gas reserves after Russia but politics, sanctions and construction delays have slowed the country's gas development and analysts say it is unlikely to become a major exporter for a decade.

The United States has urged its allies not to invest in Iran as part of a campaign to force Tehran to stop its nuclear programme. Washington is concerned the programme is aimed at making atomic bombs but Iran says it is meant for electricity production so that it can export more of its valuable oil and gas.

Iran's huge oil and gas reserves are a strong magnet for international energy companies despite the political risks.

"Officials of Iran's Oil Ministry and the managing director of the Austrian OMV have signed a gas agreement worth $18 billion," state radio said.

Under the deal, OMV would cooperate with Iran in producing liquefied natural gas, the radio added. State television said OMV would also purchase gas from Iran.

The Islamic republic is keen to become a big gas exporter but has been slow to develop its resources. LNG is natural gas altered for transportation in special tankers.

Gholamhossein Nozari, managing director of the National Iranian Oil Company (NIOC), said three agreements had been signed with OMV, concerning the development of phase 12 of the South Pars gas field as well as construction of an LNG plant.

"Negotiations with the Austrian OMV company ended with an agreement that this company ... participates in the upstream and downstream activities of this project," he was quoted as saying by the Mehr news agency.

He said OMV would take a 10 percent stake in the new plant, from which it would buy 10.2 million tonnes of LNG per year. The report did not give details on when construction would start.

The IRNA news agency said Iran would deliver five billion cubic metres of natural gas per year to Europe via the planned Nabucco pipeline, a 4.6 billion euro project to transport gas from Turkey to Austria. OMV heads the Nabucco consortium.

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