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Sun 19 Oct 2008 12:02 AM

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Iran, Bahrain agree framework for gas deal - report

'One step closer' to final agreement for export of 1bn cubic feet of gas per day.

Iran has reached a framework deal to export 1 billion cubic feet of natural gas per day to Bahrain and the two countries are now "one step closer" to a final agreement, the state-owned Iran newspaper reported on Saturday.

Iran, which sits on the world's second largest gas reserves, has said it would prefer to sell gas to nearby Gulf states but has been slow to reach any export deals. A contract with the United Arab Emirates has been held up for years.

The newspaper quoted Oil Minister Gholamhossein Nozari as saying Tehran and Manama had signed a new memorandum of understanding (MOU) during his visit to Bahrain this week.

"We got one step closer to signing the agreement," Nozari was quoted as saying. The report said the two sides reached a "framework" for a deal but gave few details.

Nozari said the gas would come from the country's South Pars field. Iran and Bahrain signed another MOU in 2007.

Iran has been slow to develop gas exports partly because of US sanctions on Tehran that have hindered access to technology for liquefied natural gas (LNG) plants. But political bickering over the price for selling gas has also held up contracts.

A deal with Crescent Petroleum of the United Arab Emirates, signed in 2001, has yet to be finalised because of a row over prices.

Analysts say Iran is unlikely to become a major exporter for a decade. (Reuters)

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