Iranian caretaker Oil Minister Gholam Hossein Nozari and Syrian counterpart Sufian Allaw signed the memorandum of understanding in Tehran that will see Iran exporting three billion cubic metres (105 billion cubic feet) of natural gas annually to Syria.
The agreement is the latest sign of the expanding political and economic ties between the two allies, which are both accused by the United States of fomenting the violence in Iraq, allegations that both deny.
“With the signing of these agreements, experts will start work to define the transit cost and examine the other aspects of the contract,” said Nozari.
State television said that the exports are set to start in 2009 and will be worth one billion dollars to Iran annually.
Nozari said the gas would be supplied to Syria via its northern neighbour Turkey, which already receives Iranian gas through a pipeline linking the northern city of Tabriz and Ankara.
Iran has the world’s second largest gas reserves after Russia but until now has remained a relatively minor player in the global export market. It also faces huge consumption demands from its growing population at home.
The Islamic republic supplies several billion cubic metres of gas to Turkey annually and has signed a preliminary deal with Ankara for exporting gas into Europe, a move bitterly criticised by the United States.
Supplies to Turkey have on occasion been hit by wrangling about price and quality, the high demand in Iran as well as sporadic attacks on the pipeline blamed on Kurdish militants.
The gas deal is the latest example of the expanding cooperation between Iran and Syria, one of the very few Arab nations to back Tehran during its 1980-1988 war with Iraq.
Syrian President Bashar al-Assad and Iran’s Vice President Parviz Davoudi had earlier this year unveiled a joint car factory outside Damascus to produce 10,000 units of the new “Sham” car every year.
The two ministers meanwhile also spoke about constructing an oil refinery with a refining capacity of 140,000 barrels a day in Syria in cooperation with Iran and its chief Latin American ally Venezuela.
