TEHRAN – The Iranian Oil Industries' Engineering and Construction (OIEC) Company has signed a $1.9 billion contract with a domestic consortium to develop the on-shore Azar oilfield.

According to the agreement, which was signed on Tuesday, the oil field will be developed in six years and it will produce 50,000 to 65,000 barrels of light crude per day for a period of 25 years.

The contract was inked with the consortium after Russia’s Gazprom failed to implement the project.

"Unfortunately Russia's Gazprom failed to fulfill its commitment and ignored ultimatums of the National Iranian Oil Company," the Fars news agency quoted NIOC managing director Ahmad Qhalebani as saying. "We decided to end our cooperation in the Azar oilfield and give the project to domestic contractors."

In 2009, Iran signed preliminary agreement with Gazprom Neft, Gazprom's oil unit, for a potential contract of $2 billion to develop the field. Azar is a cross-border field shared with Iraq, where it is called Badra. Reserves on both sides total 400 million barrels.

Iran's 2010 proved oil reserves were 137 billion barrels, unchanged from the 2009 figure and representing 9.9 percent of total global reserves, Middle East Economic Digest (MEED) magazine reported.

NIOC increased its own reserves estimate for the second time in a year to 155 billion barrels in April, the report added.

Crude oil production in Iran in 2010 totaled 4.3 million barrels per day - up 46,000 bpd from its 2009 production of 4.2 million bpd - an increase of 1.1 percent.

Gas production also climbed 5.6 percent to 138.5 billion cubic meters from 131.2 billion cubic meters in 2009.