"The two sides agreed to make their best endeavours to conclude the definitive agreement by February 2017," the Indian ministry said in a press release.
The Farzad-B natural gas field was discovered four years ago. It is estimated to hold 18.75 trillion cubic feet of gas, according to the latest estimates.
The Indian company ONGC Videsh, which has drilled an exploration well in the field, is expected to prepare a master development plan and detail a gas pricing formula.
India has been one of Iran’s largest buyers of crude oil, the Indian energy ministry said. The two countries also agreed, at a meeting in Tehran, to explore possibilities for Indian firms getting more development and production contracts from Iran.