Energy-rich Turkmeni-stan has signed a deal with independent Russian gas producer Itera to jointly develop an offshore field in the Caspian Sea, Turkmen state media reported Monday.

In a signing ceremony overseen by the presidents of Russia and Turkmenistan on Sunday, the sides agreed to begin work next year on developing the field, which is estimated to hold 160 million tons of recoverable oil and 60 billion cubic metres of natural gas.

The production-sharing agreement could help soothe relations between the two former Soviet states, which have been strained by mutual recriminations over a gas pipeline explosion in April that halted deliveries of Turkmen gas to Russia.

In televised remarks at the signing ceremony, Turkmen President Gurbanguli Berdymukhamedov said the deal "marks an important new step in the development of economic relations between our two countries."

According to preliminary estimates, annual production at the field on Turkmenistan's Caspian shelf - designated Block 21 - could reach about 10 billion cubic metres of gas and around 20 million tons (140 million barrels) of oil, state newspaper Neutral Turkmenistan reported.

Itera, headed by Turkmen-born Russian businessman Igor Makarov, has been operating in Turkmenistan for 16 years, but the deal on Block 21 marks its first successful effort to secure an offshore concession in the country.

Earlier this year, German energy giant RWE AG also signed a deal with Turkmenistan to develop oil and gas fields off the Caspian shore, marking a breakthrough in European efforts to tap the country's lucrative energy resources.

Turkmenistan is the largest gas producer in the former Soviet Union after Russia, which has had a lock on most of the reclusive desert nation's gas exports since the 1991 Soviet collapse.

Pipeline blast

However, natural gas supplies from Turkmenistan to Russia have been suspended since the pipeline blast, which Turkmenistan blames on the Russian gas monopoly Gazprom. The pipeline has been fixed, but deliveries have not resumed.

In another development that could put pressure on Russia's hold on Turkmen gas exports, Ukrainian President Viktor Yushchenko is due to visit Turkmenistan this week for talks on buying gas directly from the Central Asian nation. Ukraine currently imports its gas from Russia, shipping it on to Western Europe.