In its biggest ever investment abroad, state-run Indian Oil Corporation has clinched a $3 billion deal to develop a gas block in the gigantic South Pars gas field of Iran and sell LNG from it.

IOC will partner Iran's Petropars in bringing to production one of the 30 phases planned to develop the 500 sq mile South Pars field that is estimated to hold 436 trillion cubic feet of gas reserves, officials said.

The two will also put up a liquefaction plant in South Iran which is designed to make available 9 million tonnes per annum of LNG to be exported to India and other countries.

"The deal will be formally signed after it is approved by the Iranian authorities," they said, adding that IOC director (business development) Naresh K Nayyar and Petropars chairman Akbar Torkan are tying up loose ends.

The Indian company will have 40 per cent stake in the upstream development with the remaining being with Petropars.

In the liquefaction plant, IOC would have 60 per cent stake and the marketing rights to sell the entire 9 million tones of LNG.

Petropars is a subsidiary of National Iranian Oil Co. The NIOC has 60 per cent stake in Petropars while Iran's IDRO (Industrial Development and Renovation Organisation) Pension Fund has the remainder.

The gas block in South Pars field was besides the Yadevaran oilfield, in which Tehran has offered 20 per cent stake to New Delhi in lieu of India buying 5 million tonne per annum of LNG. Yadevaran oilfield, recently renamed from Kush-Hossainieh, is said to have a potential to produce 300,000 barrels per day.