UPDATE 2-Iran plans $12.3 bln bonds to fund key gas project

* Iran needs $50 billion to develop gas field in Gulf

* Plans to issue bonds in foreign currencies and rials (Adds detail, wraps separate)

By Hashem Kalantari

TEHRAN, May 31 (Reuters) - Iran plans to issue $12.3 billion of foreign currency and rial-denominated bonds over the next three years to help finance the development of its major South Pars gas field in the Gulf, a state firm said on Sunday.

Total investment needs for remaining projects to develop South Pars, the world's largest pure gas reservoir, amount to $50 billion, Pars Oil and Gas Company Managing Director Ali Vakili said in a statement. The company is part of the National Iranian Oil Company.

It would be a rare move in recent years by the world's fifth-largest crude exporter, which is under U.N. and U.S. sanctions over disputed nuclear work, to tap investors for loans in non-Iranian currencies.

Iran sits on top of the world's second-largest natural gas reserves after Russia but the sanctions and other factors have slowed the development of exports.

Analysts say the Islamic Republic, which is also the world's fifth-largest oil exporter, needs more foreign investment and technology to help expand capacity in its energy sector.

"We are planning to issue over the next three years $12.3 billion worth of foreign exchange and rial bonds ... for the development of South Pars gas field," Vakili said.

He said priority would be given to South Pars phases 15-18, out of its total of 24 phases. The bonds would be issued through two state banks, Mellat and Industry and Mine.

EURO BONDS

"Just for the development of the remaining South Pars projects there will be a need for $50 billion in capital," Vakili said.

In the absence of this, "we will not be able to witness the commissioning of planned projects by the end of the fifth five-year (economic development) plan" in 2015, he said.

He did not give details on how much Iran would issue in foreign currencies. But Oil Minister Gholamhossein Nozari was quoted as saying that Iran planned to issue bonds worth 1 billion euros ($1.40 billion) for South Pars projects. [ID:nDAH133353]

"With the approval of the government, 1 billion euros worth of bonds will be issued for the development of South Pars phases," the Mehr News Agency quoted him as saying.

The state oil firm has estimated annual investment needs at $25-30 billion in Iran's oil and gas sector. But major energy firms such as Royal Dutch Shell (RDSa.L) and Total (TOTF.PA) have either delayed or scrapped large projects in Iran.

Nozari, who was speaking at a ceremony for the signing of a $5 billion contract for the development of South Pars phases 20-21 with an Iranian consortium, said money from Iran's Oil Stabilisation Fund could also be used.

"There will be $2 billions taken from the fund, of which the bulk is for the development of South Pars," he said.

In November, a central bank official was quoted as saying Iran was considering a return to international debt markets with bonds worth $1 billion, for the first time since its last Eurobond matured in April 2008.

Analysts have said that international credit conditions may make it difficult for Iran to raise funds and that financial and other sanctions on Tehran could deter investors. Many Western banks have cut ties with the country.

(Writing by Fredrik Dahl; editing by Erica Billingham)