Iran will issue the equivalent of $1 billion in bonds in local currency this week to help finance the development of its South Pars gas field in the Gulf, an Oil Ministry official said on Sunday.

Ali Vakili, managing director of Pars Oil and Gas Company, a unit of National Iranian Oil Company, said the 10,000 billion rials of bonds to be issued in the coming week were part of a $3 billion bond issue to happen by the year end, Mehr news agency reported.

The cash is needed to develop the gas field which has suffered from the withdrawal of Western energy companies, the semi-official news agency said.

New European Union sanctions ban EU companies from investing in Iran's energy sector and also restrict the transfer of euros into the Islamic Republic.

The measures are part of international efforts to pressure Tehran to curb its nuclear programme which some countries fear might be aimed at making a bomb, something Iran denies.

Vakili said his company will need some $40 billion for the remaining phases of the giant Pars gas field in the Gulf which it shares with Qatar. Iran hopes South Pars will generate some $100 billion a year in income when fully developed.

The $3 billion rial-based bonds will be issued in six instalments, the second of which will be in mid-September, Vakili said. He did not specify the amount.-Reuters