TEHRAN (AFP), May 25, 2010

Iran's Revolutionary Guards are negotiating with the country's oil ministry to finalize oil and gas development contracts worth $10 billion, several Tehran newspapers reported Tuesday.

The Guards' main industrial arm, Khatam-ol Anbiya Construction, has been bidding for Iranian energy projects as multinational firms have come under pressure to reduce their involvement in the face of United Nations and U.S. sanctions.

The largest project is the development of three blocks of the giant offshore South Pars gas field in the Gulf, estimated to cost between five and six billion dollars, the Donyay-e Eghtesad newspaper said, quoting a Monday report by the Mehr news agency.

"After the Turks (Turkish Petroleum International Company) were left out of phases 22 to 24 of South Pars, talks with Khatam-ol Anbiya are in the final stages to take over these three gas blocks," the report said.

The giant holding company has so far been mainly involved in construction projects, building roads, bridges, ports and pipelines.

But the Guards, who have established significant control over Iran's economy under President Mahmoud Ahmadinejad, insisted in April that they were capable of replacing Western companies in major gas projects.

Khatam-ol Anbiya is also in talks with Iran's National Gas Company to build a gas pipeline stretching 600 kilometers (375 miles) in northeastern Iran under a $1.3 billion contract, the report said.

In oil, the group is discussing construction of a three-billion dollar oil pipeline stretching 1,600 kilometers (1,000 miles) across Iran linking the Caspian Sea to the Gulf.

In March, it signed an agreement with the National Iranian Oil Refining and Distribution Company to build three oil pipelines for about $850 million.

It has also inked a memorandum of understanding with the National Iranian Oil Company to develop Susangerd oilfield, with estimated reserves of 8.8 billion barrels. The contact is worth $500 million.

Copyright (c) 2010 Dow Jones & Company, Inc.