Baku (AFP) – Azerbaijan, which will sign a deal with Iran on Wednesday to close a $1.6bn oil and gas pipeline that will be built along Azerbaijan’s border, has secured the largest deal in a decade for the construction of the project.
Azerbaijan and Iran signed a deal on Wednesday for the completion of the pipeline, which would carry Azerbaijani gas to Iran via the Gulf of Aqaba and through Iran’s Sistan-Baluchestan region.
Baku signed the deal with Tehran at a ceremony attended by Iranian president Hassan Rouhani, who has repeatedly threatened to destroy the pipeline if it goes ahead.
Iran’s deputy foreign minister, Abbas Araqchi, was among several officials who arrived in Baku for the signing ceremony.
The deal is expected to be signed in Bali, Indonesia, with Iran expected to receive a large amount of the money.
Baghdad has been pressing Iran to halt construction of its planned pipeline, as well as a planned pipeline that would run from the port of Tartus in Turkey through Syria to the Mediterranean.
Iran says the pipeline is vital to the country’s energy security.
It would bring in Azerbaijian gas to the region through the Sistan Strait.
Iran and Azerbaijan have previously signed deals to transport gas through Azerbaijan’s southern port of Sistan and through Azerbaijan and Syria.
Iran has also signed deals with Egypt and Russia to transport Azerbaijians gas through its eastern port of Sevastopol.
The pipeline was one of the main targets of Iran-backed Sunni rebels in Syria’s civil war.
Bashar al-Assad’s government in Damascus has said the pipeline will not cross the Suez Canal and could not pass through the Lebanese territory of Bekaa Valley.
Iran also has ambitions to build a pipeline to Europe via the Black Sea and via the Strait of Gibraltar.
The United States and other Western powers have said they are concerned about the pipeline’s route.
In July, the United States imposed sanctions on Iran for failing to halt the construction and delivery of the proposed pipeline.
The $1bn deal between Iran and Azerbaijan came a month after the Islamic Republic also signed a $3bn deal with Russia, the world’s largest oil exporter.