Oman signed an initial agreement with Iran Wednesday to build a $1 billion submarine pipeline to import gas from the Islamic republic, Oman's oil and gas minister said, AFP reported.
The agreement was reached on the first day of a visit by Iranian President Hassan Rouhani, aimed at boosting ties between Tehran and its Gulf ally, and easing tension with other Gulf states.
It follows a memorandum of understanding signed in 2009 to build a 200-kilometre (124-mile) undersea pipeline.
"We have signed an initial agreement to build a pipeline under the Gulf of Oman to transport gas from Iran to Oman," Mohammad al-Ramahi told AFP.
The project should be completed by the end of 2017 and will cost around $1 billion (721 million euros), he said.
Ramahi said the two sides will begin technical and feasibility studies of the project, including deciding on the path of the pipeline, indicating that it might connect to Sohar industrial port in northern Oman.
Oman and Iran are seeking to expand trade, which reached $1 billion last year, as well as bilateral investments which they expect will top $10 billion by the end of this year, Iranian Ambassador Ali Akbar Sibeveih said Monday.
Oil-and gas-rich Iran struggles to export its products due to strict US and European sanctions on Tehran over its controversial nuclear programme.