A Swiss utility has signed a natural gas purchase contract with Iran, the Swiss foreign minister said on Monday, a move that may irritate Washington as it seeks to isolate Tehran over its disputed nuclear plans.
Foreign Minister Micheline Calmy-Rey, whose country in the past has worked to find a compromise in the nuclear row, also said after meeting her Iranian counterpart she was convinced "the possibility of diplomacy" had not been exhausted.
"And we are ready to contribute to solutions," she told a news conference broadcast on Iranian state television without elaborating. Iran rejects US accusations its nuclear programme is aimed at building bombs.
The Swiss energy group said last year the 25-year deal was worth between €10 billion (Dh48.9bn) and €22 billion, depending on several factors such as the price of oil.
Calmy-Rey said the contract was "important in a long-term perspective" for both sides and added it did not violate UN Security Council resolutions imposing sanctions on the Islamic Republic over its nuclear programme.
"We have a strategic interest to secure our gas supplies and diversify our gas suppliers," Calmy-Rey said at the joint news conference with Iranian Foreign Minister Manouchehr Mottaki.
The Swiss minister said in Geneva on Sunday the contract with Iran could help ease Europe's dependence on Russian gas. EGL is 87-per-cent owned by Axpo, an unlisted energy group owned by Swiss cantons.
A spokesman for Elektrizitaetsgesellschaft Laufenburg (EGL) said the National Iranian Gas Export Company could deliver the first gas under the contract using existing pipelines to southeast Europe from next year.
Talks with potential buyers in southeast Europe are continuing and supplies would depend on EGL securing transport rights through existing pipelines, he said.
EGL expects to get about 5.5 billion cubic metres of gas a year under the contract once the Trans Adriatic Pipeline opens towards the end of 2011 or early 2012. More than half of it will be used to fire the company's power plants in Italy.
"The rest could be taken to Switzerland or sold on the market," the spokesman said.
Iran sits on the world's second largest gas reserves after Russia, but analysts say politics, sanctions and construction delays have slowed the sector's development.
The United States has led international efforts to penalise Iran for failing to allay suspicions that it is seeking nuclear weapons and has been urging other countries to cut trade ties.
Washington has not had diplomatic ties with Tehran for almost 30 years. Switzerland handles US interests in Iran.
Last year, diplomats said Switzerland had proposed a staged plan leading to a simultaneous suspension of Iran's uranium enrichment work and of UN sanctions, which would enable talks between Iran and six world powers to begin.
Iran has ruled out halting enrichment, a process to make fuel for power plants that also has the potential to provide material for bombs.
Western firms have become more wary of investing in Iran because of the nuclear row that has led to three sets of UN sanctions. In contrast, Iran has over the last few months signed deals with energy-hungry Asian countries and firms.
The Trans Adriatic Pipeline (TAP) - which will transport gas via Greece and Albania and across the Adriatic Sea to Italy's southern Puglia region - is a 50-50 joint venture between EGL and Norway's StatoilHydro and is expected to cost about €1.5 billion to build. (Reuters)
Iran, Swiss firm sign gas purchase deal