TEHRAN: Iran’s Bank Mellat, which is under US sanctions for allegedly financing weapons proliferation, is to issue bonds worth one billion euros ($1.36 billion) to develop gas fields, state media reported Saturday.
Iran’s economy minister Shamseddin Hosseini said the bonds, with a three year lock-in period, will carry interest of eight percent, ISNA news agency quoted him as saying.
“The bonds will be issued on March 6 and the National Iranian Oil company will act as guarantor” for the bond issue, Hosseini said.
The funds raised will be used to develop phases 15, 16, 17 and 18 of South Pars gas field which holds half of Iran’s natural gas reserves, he added.
Iran, which has the world’s second largest natural gas reserves after Russia, has previously said it plans to invest $85 billion within a decade to bolster gas exports.
While Iran sits on top of huge gas reserves it imports as much of it from Turkmenistan as it exports to Turkey and has a long way to go to become a significant exporter. The development of Iran’s gas sector is hampered by a lack of productive investment and the growth of domestic consumption.
Iran has been wooing Chinese firms in a bid to compensate for the absence of Western companies in its energy sector because of sanctions.
Western governments have put pressure on international firms to cut ties with Iran in a bid to pressure the Islamic Republic to end a uranium enrichment program the West believes is aimed at producing atomic weapons. Iran says it wants nuclear energy purely for peaceful purposes.
Iran puts its gas reserves at 28 trillion cubic meters and has drafted ambitious exports plans to Asian, Middle Eastern and European countries.
Saifollah Jashnsaz, chief of National Iranian Oil Co, said on February 21 that “if we do not make necessary investment [in the energy sector], the harm from the lack of timely investment will be irreversible.”
Leading Iranian banks have been specifically targeted by the international community, with the United States sanctioning Mellat, Melli, Saderat and Export Development Bank of Iran, accusing them of financing weapons proliferation.
The sanctions mean that any assets held by the bank under US jurisdiction are frozen and American citizens are barred from dealing with the institutions.