TEHRAN: Iran raised 140 million euros on the first day of a 250 million euro bond offering to help finance development of the giant South Pars natural gas field, the official IRNA news agency reported on Wednesday. The issue is part of a 1 billion euro bond sale which got under way in March with the first of four installments of 250 million euros each. The sale of the second tranche started on Tuesday, IRNA said. It represents a rare bid by the Islamic Republic, which is under UN and US sanctions over its disputed nuclear program, to raise capital in this way. "The buyers of these bonds were from Dubai, Germany, Turkey and other countries in the Gulf region," IRNA quoted Amir Kabirian, an official at Mellat Bank, as saying. "The sale is expected to be completed this week." Bank Mellat is the issue's lead manager. IRNA did not give details about the terms, but Iranian media last month said the first installment of bonds would mature in three years and they had an interest rate of eight percent. Iran needs capital to help expand and modernize its all-important energy sector, with many foreign companies increasingly reluctant to invest in the major oil producer due to an international standoff over its disputed nuclear work. The bonds, guaranteed by the state National Iranian Oil Company and issued by its subsidiary Pars Oil and Gas Company, are designed to raise funds for the development of phases 15-18 of South Pars. South Pars, shared by Iran and Qatar, is the world's largest reservoir of gas. Last month, a senior oil official said Iran planned to issue euro and rial denominated bonds worth a total of about $9.7 billion in the 2010-11 year to help finance energy projects. Oil Minister Massoud Mirkazemi has estimated the investment needs in the country's oil and gas sector at $200 billion in the 2010-15 period. Iran has the second biggest gas reserves in the world after Russia, but sanctions and other factors have slowed its development as an exporter. It has increasingly shifted to Asian countries to develop its oil and gas fields. State-owned Asian firms are less susceptible to Western pressure to stay away from the Iranian market and are eager for energy supplies from the Islamic state to feed future growth. The United States and its European allies have been trying to pressure Iran to suspend its disputed nuclear program, which the West fears is a cover to build bombs. Tehran says its atomic work is for peaceful purposes and will not be halted. The United States, which has imposed sanctions on most trade with Iran since its 1979 Islamic revolution, is pushing for a fourth round of UN penalties on Iran because of its refusal to halt sensitive atomic work.
