Iran has signed a memorandum of understanding (MoU) with Turkey for the development of two phases of its South Pars gas field in the Gulf and on transferring gas to Europe, Iran's oil minister said.

The two sides had signed a deal last year on joint gas production and export of Iranian gas via Turkey to Europe.

But since then they have been working to finalise the deal, such as hammering out investment terms. The report on the Iranian oil ministry's web site Shana about Monday's MoU gave few details.

Turkish Energy Minister Hilmi Guler has been in Iran to discuss expanding energy cooperation, a move that has drawn criticism from the United States which is seeking to isolate the Islamic Republic over its nuclear plans.

"This (MoU) is about the development of phases 23 and 24 of South Pars gas field with joint investment of Iran and Turkey and 50 percent of gas produced from these fields will be sold to Turkey," Oil Minister Gholamhossein Nozari said, Shana reported.

Nozari said a second part of the deal covered tranferring gas to Turkey from Iran, and a third element covered transfering 35 billion cubic metres of gas a year on to Europe.

Under the deal signed last year, Turkey was to produce 20.4 billion cubic metres of gas from South Pars.

Turkish Energy Ministry sources told Reuters last month that the neighbours had resolved problems on planned investment in South Pars and that they might sign a deal in November.

Ankara imports about 10 billion cubic metres (bcm) a year of gas from Iran, about 30 percent of its natural gas needs. An Iranian deputy oil minister, Akbar Torkan, said Turkey had asked Iran for more gas but did not give details.

Iran sits on the world's second biggest gas reserves but last winter it cut exports to Turkey in an unusually cold snap when Tehran struggled to meet domestic demand. Iranian officials have since said they have taken measures to prevent a shortfall.

"We have had positive negotiations with Iranian officials and they have promised us there will not be any problem with respect to gas supply to Turkey this winter, and we have no worries," Guler was earlier quoted by Shana as saying.

Guler was speaking from Assalouyeh, the heartland of Iran's gas industry on the Gulf. Iran and Turkey are also discussing plans for joint venture electricity generation.

Iranian state radio quoted Iranian Energy Minister Parviz Fattah as saying the two reached agreement about power plants with 6,000 MW capacity. - Reuters