Spain's Repsol YPF SA (REP) said Tuesday a planned liquefied natural gas, or LNG, project in Iran with Royal Dutch Shell PLC (RDSA) and National Iranian Oil Co. is "going slow, with a final investment decision now expected by 2012.

"The Persian LNG project between Repsol, Shell and NIOC at the moment is going slow compared to other similar projects in the region--it is a little affected by geopolitics," Usama Siddiqui, an Iranian-based senior commercial advisor for LNG at Repsol Persian Gulf, told Zawya Dow Jones.

The Persian LNG project covers the development of phases 13 and 14 of the giant offshore South Pars gas field in the Persian Gulf and the construction of two LNG trains, each with a capacity of 8.1 million metric tons a year.

LNG is gas cooled down so it becomes liquid and can be transported over long distances on special vessels.

"Our target for a final investment decision is in two years from now; politics is a factor but also external factors like the contractors market which has not been very favorable," Siddiqui said. "With business in Iran you have to comply with a lot of obligations and obviously the sanctions won't help."

Despite its huge gas reserves, the world's second largest, Iran has struggled to secure LNG technology, largely due to sanctions and U.S. pressure over its controversial nuclear energy program. Unlike its small Persian Gulf neighbor Qatar , the Islamic republic hasn't launched a single LNG project so far.

Siddiqui added that Iran has enough gas for domestic use and exports. "There's a lobby within Iran projecting domectic gas as a priority but they have so much that they can cater for domestic and export," he said.

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