NEW DELHI, Jan 7: India has reached an agreement with Iran to buy 7.5 million tons of liquefied natural gas a year over 25 years, the government announced Friday.

Oil Minister Mani Shankar Aiyar sealed India's first big gas deal with his Iranian counterpart Bijan Namdar Zanghaneh on the sidelines of an Asian ministers' oil meeting in New Delhi.

"India's state-run Gas Authority of India Limited and Indian Oil Corp have signed an agreement with National Iranian Gas Export Corp Friday to import 7.5 million tons of LNG for 25 years," Aiyar said in a statement.

Zanghaneh confirmed the agreement but neither minister gave details of the pricing formula. Negotiations had begun in January 2003 as India sought to meet a huge need for gas in the country of more than one billion people.

India had been pushing for a fixed-term/fixed-price contract similar to a deal it has with Qatar, but Iran had signalled unwillingness to agree such terms. "We have come to a good deal. In the present circumstances, it is a good deal," said Gas Authority of India Limited chairman Prashanto Banerjee.

India and Iran had failed to reach an agreement last month when Aiyar went to Tehran to attend an oil and gas industry conference. The government statement also said India's state-run Oil and Natural gas Corp's overseas arm has entered into an agreement with the National Iranian Oil Company to take a 20 per cent stake in Iran's Yadavaran field and an unspecified stake in the Jufeyr field.

"It was agreed to further the mutual cooperation between the two countries in the hydrocarbon sector in a big way," said the Indian government statement. Aiyar said the Iranian oil minister had invited more Indian investments in his country.

"The Iranian side further offered to the Indian companies the opportunities for investments for producing fertilizers, ethylene, methanol, ammonia and other things in Iran," he added.

The Iranian side also suggested that Indian firms could set up energy-intensive projects such as aluminium, cement and steel firms, he said. State-run Indian Oil Corporation, the country's largest oil refining and marketing company would explore investment opportunities in Iran, he added. -AFP