Petropars managing director Akbar Torqan said his company is currently negotiating with Hyundai over state-owned National Iranian Oil Company's (NIOC) precondition that local companies be used for part of the contract.

The report didn't specify the gas refinery's location, but most onshore South Pars facilities are in the port city of Assaluyeh in the southern province of Bushehr.

Scheduled to be completed by the middle of 2005, phases four and five will produce around 2 billion cubic feet of gas a day. Petropars is operator with a 40% stake while Agip holds the remaining 60%.

In March, French oil giant TotalFinaElf began producing from the South Pars field. The company said Phases 2 and 3 of the South Pars field are expected to produce 2 bcf of gas and 80,000 barrels of condensate per day from 20 wells tied into two unmanned platforms.

Another company that would like a piece of South Pars' action is BHP Billiton. While the resource giant denied earlier in the year that it was in discussions with NIOC over a refurbishment contract for the Foroozan-Esfandiar oilfields, it did indicate it was interested in Iran, which has 9% of the world's proven oil reserves and 16% of the world's gas reserves.