March 17, 2008 / 9:30 AM / in 11 years

Iran and Swiss firm sign gas purchase deal

TEHRAN (Reuters) - A Swiss utility has signed a natural gas purchase contract with Iran, the Swiss foreign minister said on Monday, a move that may irritate Washington as it seeks to isolate Tehran over its disputed nuclear plans.

Switzerland’s Elektrizitaetsgesellschaft Laufenburg (EGL) last year said it had finalized a deal with the National Iranian Gas Export Company for the delivery of 5.5 billion cubic meters of gas per year to Europe through a pipeline scheduled to be complete in 2010.

The Swiss energy group at the time said the value of the 25-year deal was above 10 billion euros ($13.32 billion) and below 22 billion euros, depending on a number of factors such as the price of energy.

“We have a strategic interest to secure our gas supplies and diversify our gas suppliers,” the Swiss minister, Micheline Calmy-Rey, told a news conference broadcast on Iran’s Press TV. “We have to import all our gas and oil.”

She said the deal was “important in a long-term perspective” for both sides and added it fully complied with U.N. Security Council resolutions imposing sanctions on the Islamic Republic over its nuclear program.

She said in Geneva on Sunday, before traveling to Tehran to sign the agreement, that it could help ease Europe’s dependence on Russian gas.

Iran sits on the world’s second-largest gas reserves after Russia, but analysts say politics, sanctions and construction delays have slowed the sector’s development.

The United States has led international efforts to penalize Iran for failing to allay suspicions that it is seeking nuclear weapons and has been urging other countries to cut trade ties. Tehran says its nuclear program is purely civilian.

Washington has not had diplomatic ties with Tehran for almost 30 years. Switzerland handles U.S. interests in Iran.

Calmy-Rey said she was convinced “the possibility of diplomacy has not been exhausted and we are ready to contribute to solutions.”

Western firms have become more wary of investing in Iran because of the nuclear row with the West that has led to three sets of U.N. sanctions.

In contrast, energy-hungry Asian countries and companies have proved less sensitive and Iran has over the last few months signed deals with Chinese, Indonesian, Malaysian and Vietnamese firms.

Reporting by Fredrik Dahl, Writing by Edmund Blair and Fredrik Dahl; Editing by James Jukwey

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