The development of Iranian oil and gas reserves in the Caspian Sea may be delayed after Brazil’s Petrobras said it would consider pulling out of oil exploration work in Iran due to a lack of commercial discoveries.

Petrobras international director Jorge Zelada told Brazil’s state-run Estado news agency, it may return its concessions to the Iranian government due to disappointing drilling results. In February 2009, Petrobras said it planned to spend $250m on initial drilling in the Caspian after signing a landmark production-sharing deal.

Significant uncertainty had surrounded the deal, which was to be the first production-sharing agreement signed in Iran. Petrobras reassessed its investment plan in October 2008 to take account of the fallout from the global economic crisis.

Petrobras has been exploring for oil and gas in Iran since 2004.