Iran is in talks with Asian banks on a 1 billion euro ($1.40 billion) bond to finance the development of its largest gas field, as part of its pursuit of billions of energy sector funding, a senior Iranian oil official said on Monday. "We are discussing with at least two Asian banks on the lead role for a 1 billion euro participation bond … and we hope to issue the first tranche soon," Hojjatollah Ghanimifard, vice president of international affairs at the National Iranian Oil Company, told Reuters.
"We have not decided which one will be the leader."
He said the bond was to finance the development of the South Pars gas field, the world's largest pure gas reservoir, and added that the participation bond was a kind of lease.
It would not give the banks equity in the field, but the reserves would act as a guarantee for the loan.
In May, an Iranian state firm said Iran planned to issue $12.3 billion of foreign currency and rial-denominated bonds over the next three years to help finance the South Pars field.
In all, Iran's five-year energy sector investment plan required investment totalling around $30 billion per year, Ghanimifard said.
For years the country has struggled to develop its huge reserves and like the rest of the world now has to contend with an international lack of credit, as well as problems specific to Iran.
"The two biggest challenges facing Iran's energy industry are a constrained international credit market, coupled with hefty funding requirements for Iran's five-year oil and gas development plan," said Ghanimifard.
"The first challenge (funding) is faced by all in the oil industry and in Iran it is not as easy as it was before."
Iran has increasingly turned to Asia, which in some cases still has available cash to invest and whose energy demand is expected to outpace that in the developed world.
Western firms are wary of investing in the Islamic state for fear of U.S. and U.N. sanctions. Washington is putting pressure on Iran over its nuclear programme, which Tehran says is for peaceful purposes but which the West suspects of being aimed at making arms.
Asian state-owned companies looking to meet the future energy needs of their fast-growing economies have been less subject than their Western peers to pressure to keep out of Iran.
Ghanimifard was sanguine about the prospects of securing financing even in a difficult climate.
"We could have good financiers for small, medium and even in some cases the very big financial projects," he said.
Ghanimifard also said Iran was in "serious talks" with a Malaysian company on exploration in Iran's Caspian region, but he declined to say which firm was involved.
