Dubai: Iran will begin supplying Oman with 20 million cubic meters of natural gas “soon”, according to Iranian Oil Minister Bijan Namdar Zanganeh.

The deal stems from negotiations carried out in August last year when Zanganeh and his Omani counterpart signed a memorandum of understanding. However, the first delivery would still appear to be some years away since no pipeline exists between the countries as of yet. The deal will also see the construction of a 260km gas pipeline between the two countries.

“Gas negotiations with Oman are over and as both sides have agreed, Iran will export 20 million cubic meters (mcm/d) of gas per day to Oman in the near future,” Zanganeh said on Saturday, according to Iran’s Fars news agency.

In 2013, the managing director of the National Iranian Gas Company (NIGC), Hamid Reza Araqi, revealed that such a pipeline will take at least two-and-a-half years years to complete. The pipeline, which has yet to have had feasibility studies completed, will cost an estimated $1 billion (Dh3.67 billion). The move is indicative of Iranian attempts to reconstruct its oil and natural gas economy and is said to be worth $65 billion over the next 25 years.

Oman has stated that approximately 50 per cent of the gas will be shifted on toward third markets. Japan, South Korea and India have been cited as potential clients.

Zaganeh, a veteran of Iranian politics who was first appointed to the cabinet in 1980 following the Iranian revolution, was appointed Minister For Oil in August 2013 and tasked with the challenge of reconstructing Iran’s Oil and Gas sectors.

Oil exports have slumped in recent years, almost halving in 2013 from 2 million to just 1.1 million barrels per day. This is mainly due to the tightening of US sanctions and an EU embargo in light of the country’s nuclear programme.

Under present regulations, only six countries are allowed to by crude oil from Iran, though regulations aren’t so tight when it comes to natural gas. However, Oman’s business dealing with Iran don’t appear isolated in the Gulf. In June this year, Kuwait also publicly stated an interest in buying more natural gas from Iran.

— Gareth Browne is an intern