The authorities in Iran has given a month's time to a consortium of Indian state-run oil companies to close contracts for beginning production at a gas field discovered in the Persian Gulf in 2006.

The Indian consortium led by ONGC Videsh, Oil India Ltd and Indian Oil Corporation has expressed interest in developing the Farsi offshore block by investing over $5 billion over a period of seven to eight years.

However, the consortium did not sing the contract to avoid being blacklisted by the US under the 1996 Iran-Libya Sanctions Act of the US. The legislation puts sanctions on all parties investing more than 20 million in any 12-month period.

The Indian companies would have found it difficult to source funds, technology and other oilfield services if the US authorities blacklisted them. The latest round of sanctions again Iran had made it even more difficult for the Indian firms to pay for oil or implement plans in the Islamic Republic.

The governments in Europe and the US are urging Asian countries to reduce oil imports from Iran so as to make their sanctions more effective in order to force Tehran to come clean on its nuclear programme. Iran is suspected of covertly developing nuclear weapons, a charge it denies and maintains that it has the right to harness civilian nuclear energy for generating power.

India's union finance minister Pranab Mukherjee recently said that it wont be possible for the country to reduce oil imports from the country, which accounts for 12 per cent of its supply.