Rovnag Abdullayev, the president of the State Oil Co. of Azerbaijan, said both sides review their gas relationship at the beginning of each year. For 2011, he said, gas deliveries from Azerbaijan will be at a minimum 35 billion cubic feet, Iran's state-funded broadcaster Press TV reports.
Iranian Petroleum Minister Masoud Mir Kazemi said the agreement was an important step in securing an energy relationship with Iran's northern neighbor.
Azerbaijan sells natural gas to the northern provinces of Iran in exchange for electricity. The terrain in Iran's north makes it difficult to distribute power.
Iranian President Mahmoud Ahmadinejad had called for a swift implementation of the bilateral deals.
Tehran said SOCAR would sell Iran excess gas to meet domestic needs. Iran aims to build infrastructure in the north that would allow it to process more natural gas deliveries.
SOCAR said in October that the reconstruction of two pipelines would give Azerbaijan the capacity needed to increase gas exports.