OMV said it had signed a so-called Heads of Agreement - a non-binding document outlining the main issues of a tentative partnership accord - with Iran's national oil company NIOC.

The Austrian firm said Iran could supply LNG for a Croatian regasification plant which OMV is helping to set up and which should start operating in 2011, allowing the Iranian company to deliver gas to Europe.

 

OMV said: "Further talks on this matter are confidential. Concrete results are not expected until the second half of 2007."

 

Sanctions


UN sanctions have been imposed on Iran for its refusal to halt enrichment of uranium, but Thomas Huemer, a spokesman for OMV, said the agreement with Iran did not violate any international rules.

   

"We are acting within the framework of Austrian law, European law and the United Nations' rules," he said in Vienna.

   

The IRNA news agency said Iran would also deliver five billion cubic metres of gas per year to Europe via the planned Nabucco pipeline.

 

Iran holds the world's second-largest gas reserves after Russia.

 

But politics, sanctions and construction delays have slowed its gas development and analysts say it is unlikely to become a major exporter for at least ten years.

 

LNG is gas frozen to liquid for transport in special tankers, avoiding the need for pipelines.