(Recasts with media saying deal signed)
TEHRAN Dec 26 Iran signed a $16 billion gas development deal with Malaysian group SKS in Tehran on Wednesday after reaching a preliminary agreement in January, Iranian media reported.
Iranian officials were not immediately available for comment on the agreement, the kind of energy deal that the United States has been trying to prevent.
Washington, which is leading efforts to isolate Tehran over atomic activities which the West fears may be used to build bombs, has sought to discourage foreign companies from investing in one of the world's largest oil exporters.
"The contract for a plan to develop the Golshan and Ferdows gas fields was signed today between Pars Oil and Gas Company, as a representative of the National Iranian Oil Company, and Malaysia's SKS Ventures," the official IRNA news agency said.
State television carried a similar report.
Iran and SKS signed a preliminary agreement in January to develop Iran's southern Golshan and Ferdows gas fields and build plants to produce liquefied natural gas (LNG).
A senior Iranian official said then that it would take 25 years to complete and that the Malaysian company would have 50 percent of the produced LNG, adding that the two gas fields contained 60 trillion cubic feet of gas.
Iran sits atop the world's second largest gas reserves after Russia. But sanctions, politics and construction delays have slowed its gas development, and analysts say the country is unlikely to become a major exporter for a decade.
Economists have said many foreign firms, particularly Western companies, are increasingly wary of investing in the Islamic Republic after the U.N. imposed two rounds of sanctions on the country over its nuclear row.
But the country's large oil and gas reserves still make it a magnet for international energy firms. Earlier this month, Iran said China's Sinopec would invest around $2 billion under a deal to develop the huge Yadavaran oil field, a deal which drew a swift rebuke from Washington.
The United States is pushing for a third set of U.N. sanctions, even though a U.S. intelligence report said Tehran had halted its nuclear weapons programme in 2003.
Iran, saying it has never had plans to build nuclear bombs, insists its nuclear work is peaceful and aimed at generating electricity so that it can export more of its oil and gas.
In January, the head of a key committee in the U.S. Congress called for a halt to trade talks with Malaysia after the preliminary gas development agreement was signed with Iran.
But a U.S. trade official last month said the United States and Malaysia planned to resume formal negotiations on a free trade agreement in early 2008. (Reporting by Zahra Hosseinian, Writing by Fredrik Dahl; Editing by David Stamp)