An Iranian state bank has been picked as lead manager for a planned bond issue to help finance the development of the country's largest natural gas field, the Oil Ministry website Shana said on Tuesday.

Mohammad Hassan Mousavizadeh, a senior adviser of Iran's Pars Oil and Gas Company, said Bank Mellat would handle the issue of the foreign currency-denominated bonds but that it could also cooperate with foreign banks.

The bonds for the development of the offshore South Pars field would be offered to Iranians living abroad as well as to foreign investors, Shana added, without giving details on size and timing of the issue.

A senior oil official told Reuters last month that Iran was in talks with Asian banks on a 1 billion euro ($1.40 billion) bond for South Pars, as part of its pursuit of billions of energy sector funding.

Shana said the National Iranian Oil Company had authorised the Pars Oil and Gas Company, a subsidiary, to issue the bonds.

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 South Pars, the world's largest pure gas reservoir.

For years Iran 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 the Islamic Republic.

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 US and UN 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. – TradeArabia News Service