CORRECT: Iran Says Signs $1 Billion Oil Field Development Deal With Russia's Tatneft

Iran said Sunday it had signed a $1 billion oil-field development deal with Russia's OAO Tatneft (TATN.RS), clinching a rare contract with a foreign company amid mounting sanctions.

Iran's Oil Ministry website Shana said state-owned Petroleum Engineering and Development Co. had awarded Tatneft a contract to help develop the Zagheh heavy crude field in southwest Iran.

Tatneft didn't return a request for comment.

The contract, which other Iranian outlets said was worth $700 million, is to increase the field's production capacity to 7,000 barrels a day.

The agreement comes as Iran has struggled to replace Western oil majors after they pulled out due to mounting international pressure over Iran's nuclear program.

Russia's OAO Gazprom (GAZP.RS) earlier this year was replaced by Iranian companies in a project after failing to finalize a deal with Tehran and, according to the Mehr news agency, China's National Petroleum Corp. is being fined for delaying works in a natural-gas project.

The Islamic Republic was recently by a string of measures against its banking sector in the U.S. and the U.K. and is facing the threat of an oil embargo in Europe.

-By Benoit Faucon, Dow Jones Newswires; +44 20 7842 9266; benoit.faucon@dowjones.com

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