By Oil & Gas Financial Journal staff

The oil minister of Venezuela has agreed to invest US$780 million to help develop Phase 12 of the huge South Pars gas field in Iran, according to a press release issued Oct. 24. The deal is expected to be signed in three months, according to Hamad Akbari, the project manager of Phase 12 .

Akbari said that Venezuela's state-owned oil company Petroleos de Venezuela S.A. (PDVSA) will finance 10% of the $7.8 billion project. In return for the investment, Venezuela is reported to have asked for an investment by Iran in a Venezuelan oil project.

The official noted that Angola's Sonangol Group previously was awarded a 20% stake in the project. Iran has been turning to non-Western companies for finance and technology due to tensions with the West over its nuclear program.

“Around $2.3 billion have been invested in the project [thus far], and we predict that investment will reach $2.8 billion by the end of the year,” Akbari said.

Last week, Iran and Venezuela signed 11 memorandums of understanding during Venezuelan President Hugo Chavez's visit to the Iranian capital, Tehran. The agreements will reportedly promote cooperation in areas including oil, natural gas, textiles, trade, and public housing. Iran and Venezuela also agreed to form a joint oil shipping company and jointly construct petrochemical plants.

The two OPEC countries have previously signed several agreements for joint participation and investments in oil and gas projects. Iran and Venezuela also signed agreements on LNG and joint construction of an oil refinery in Syria.

Iran is utilizing the South Pars gas field jointly with Qatar. The Iranian share of the field is about 14 trillion cubic meters of gas -- or about 8% of the total world reserves -- and more than 18 billion barrels of liquefied natural gas resources.

Iran has defined over 20 phases of development for the giant South Pars gas field.