Iran's national gas company and one of its state banks signed a contract worth $4 billion to provide the funding for construction of refineries, state television reported.

The deal was signed by Iran's Saderat Bank and the National Iranian Gas Company (NIGC) for the construction of Bidboland gas refinery and a unit at the Parsian refinery to produce ethanol, according to the report.

State television said Saderat, one of Iran's five major state-owned banks, will have an 80 percent share in the two projects and that NIGC will hold the rest.

'A new relation has been established between domestic banks as investors and energy projects, which will lead to the increase of efficiency in the economy,' television quoted Oil Minister Massoud Mirkazemi as saying.

The Islamic Republic says it needs around $25 billion a year in investment to meet its target development goal in oil and gas sectors. But western firms have become increasingly wary of investing in the country due to international sanctions amid the long-running nuclear dispute.

'Western countries started imposing sanctions on Iran with the aim of deterring investment ... but signing such deals (with local investors) shows that developing our energy sector will speed up,' Mirkazemi said, according to television.

'With the replacement of foreign firms with local companies, we have had good progress in our projects,' he added.

Iran also says it is still drawing interest from Indian, Chinese and other Asian firms seen as less susceptible to international pressures.

Western countries fear Iran's nuclear programme could lead to weapons production. Tehran denies the charge, saying its nuclear program is peaceful and is aimed at generating electricity.

Iran boasts the world's second-largest natural gas reserves after Russia, but US and UN sanctions have slowed its development as a major exporter.

Iran exports gas to Turkey and Armenia and plans to export to Pakistan and the United Arab Emirates, among others. – Reuters