Iran, Russia's Tatneft sign $1B preliminary deal to develop Zagheh oil field in southern Iran

TEHRAN, Iran - Iranian state TV says Tehran and Russia's Tatneft have signed a $1 billion preliminary deal to develop the Zagheh oil field.

The report says the agreement was signed Sunday in Tehran. The letter of intent deepens Moscow's business ties with Tehran despite U.S. calls for sanctions over Iran's disputed nuclear program.

The state TV report says the oil field outside the town of Deilam in southern Iran holds an estimated 3 billion barrels of heavy crude oil.

The deal envisions production reaching 7,000 barrels per day within two years, and increasing to 55,000 barrels per day in more than four years.

Iran is OPEC's second largest oil producer. The country relies on oil exports for about 80 per cent of its public revenues.