"We are an Austrian company, I have to make sure that we stick to European laws," OMV board member Helmut Langanger said when asked about US misgivings over the project.

"But it"s going on very well."

OMV signed a preliminary agreement with Iran last month to develop an area of its giant South Pars gas field, build a liquefied natural gas (LNG) terminal and export the fuel. Iranian media reports said the deal could be worth up to $30bn over 25 years.

The United States said the timing was poor given the West"s standoff with Tehran over its nuclear programme. A US government spokesman said that it would raise questions about the deal with the Austrian government and OMV.

The United States, which accuses Iran of seeking to build nuclear bombs, whereas Tehran says its programme is aimed at energy, has urged its allies not to invest in the Islamic Republic.

OMV plans to lift 3 billion cubic metres of gas per year for delivery to European markets from the LNG terminal, Langanger said.

LNG is gas cooled until it becomes liquid, enabling shipment in special tankers.

OMV is also pushing ahead with plans to develop Iran"s Mehr oilfield, Langanger said. Development will start later this year and OMV is targeting first oil output from the field in 2010, he added.

The project will cost several hundred million dollars and output will total about 40,000 barrels per day, he said.

OMV is the operator of the Mehr block with a 34 per cent stake. Spain"s Repsol YPF and Chile"s Sipetrol each have 33 per cent stakes.

Drilling at the Shabwa basin in Yemen was going better than expected and the company may exceed its production targets, Langanger said.

"The drilling is going beyond expectations and depending on further drilling we could produce more," he said.

OMV"s output of light crude in Yemen should reach 30,000 to 40,000 bpd by 2010-2011, he added.

OMV holds a 44 per cent stake in the Yemen block, while China"s Sinopec holds 37.5 per cent and Yemeni partners hold the rest.

OMV would like to participate in future sour gas production in the United Arab Emirates, he said, speaking at a news conference to mark the opening of an OMV office in the UAE capital Abu Dhabi.

The Austrian company would not be involved in a giant $10bn sour gas project that Abu Dhabi tendered in April, but was hoping to get involved in projects in about five years, Langanger said.

OMV is also looking for opportunities in projects to boost oil recovery from the region"s oilfields, he said.

PIN/REUTERS