UPDATE 1-Iran seeks to boost Brazil trade as sanctions loom

* Brazil to finance 1 billion euros of food exports to Iran

* Analysts say nuclear row deterring Western investors

* Iran shifting to Asia and elsewhere

* Major oil producer needs investment in energy sector
(Adds byline, Lula quote)

By Fernando Exman

TEHRAN, May 16 (BestGrowthStock) – Brazil will finance one billion
Euros of food exports to Iran over the next five years to make
trade between the two countries less dependent on foreign banks,
Brazilian President Luiz Inacio Lula da Silva said on Sunday.

Lula is in Tehran to help mediate in a standoff over Iran’s
nuclear programme, as Brazil seeks more diplomatic clout on the
world stage. It is seen as probably the last chance to avoid a
new round of U.N. sanctions against the major oil producer.

“It does not make sense that the trade between Iranian and
Brazilian companies depends on the credit and goodwill of
foreign banks,” Lula said in a speech to Iranian and Brazilian
traders.

The United States is pushing for a fourth round of punitive
sanctions, including measures targeting Iranian banks and
shipping, over its refusal to suspend enrichment-related
activity seen by the West as part of a programme to develop
nuclear weapons.

Iran says its nuclear program is soley to produce
electricity.

Behrouz Alishiri, head of an Iranian government body
promoting investment in the Islamic state, said on Sunday trade
between Iran and Brazil could increase nearly five-fold to some
$10 billion, but he did not give a time frame.

Analysts say Western companies are increasingly wary of
investing in Iran because of the nuclear dispute and that Tehran
is shifting to countries from Asia and elsewhere to develop its
oil and gas fields. It has also boosted ties with Latin America.

OIL SECTOR MODERNISATION

The head of Brazil’s energy regulator said in Tehran on
Saturday the two countries were likely to sign a memorandum
which would open the way for Brazilian firms to participate in
the modernisation of Iran’s oil sector.

Alishiri told an economic conference attended by
representatives from the two countries that Iran offered high
returns for foreign investors.

He suggested that Brazilian companies could buy stakes in
Iranian state firms to be privatised and also take part in
planned bond offerings to help finance energy sector projects.

“Attaining $10 billion in trade exchanges between Iran and
Brazil is not far-fetched,” Alishiri said, according to state
broadcaster IRIB.

“Iran has the highest return on capital in the world,
ranging (between) 25-85 percent in some projects. We have no
limitation in foreign investment, and welcome Brazil’s
investment in Iran,” he said.

State radio said bilateral trade had increased to more than
$2 billion in the 2009-10 year from $500 million in 2005, and
was forecast to reach some $10 billion in the next 5 years.

Haroldo Lima, the head of Brazil’s energy regulator, told
Reuters on Saturday that his country could help Iran with
equipment and engineering. In exchange, Iran could provide
Brazil with drills to help in the exploration of deep-water oil.

Lima said the Iranians had urged Brazilian companies to take
part in the privatisation of some of Iran’s refineries.

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(Reporting by Hashem Kalantari; writing by Fredrik Dahl and
Parisa Hafezi; editing by David Cowell)

UPDATE 1-Iran seeks to boost Brazil trade as sanctions loom