A multibillion-euro Swiss contract to buy natural gas from Iran has provoked threats from Washington, protests from Jewish groups and fuelled mounting concern about Europe's energy security.

The deal between the Zurich utility Elektrizitäts-Gesellschaft Laufenburg (EGL) and National Iranian Gas Export Company (NIGEC) would bring gas from Iran to Europe as early as next year, the Swiss company said.

The contract, worth between €10 billion (£7.8 billion) and €20 billion, was signed last week in Tehran in the presence of Micheline Calmy-Rey, the Swiss Foreign Minister, and President Ahmadinejad.

However, the deal to supply 5.5 billion cubic metres of gas per year for up to 25 years was condemned by the US State Department, which said that it would investigate the deal's compliance with the Iran Sanctions Act.

“We don't think that now is the time for people to be investing in Iran, not only in its petroleum or natural gas area, but in any sector of its economy,” a State Department spokesman said.

Israel also voiced a protest, calling Ms Calmy-Rey's visit to Tehran an “act unfriendly to Israel”. Jewish organisations in Switzerland said that they were disappointed with the Swiss Government's support for the gas contract.

Ms Calmy-Rey's decision to wear a headscarf during the signing ceremony brought her condemnation in parts of the Swiss media, which described her attire as that of a submissive woman.

“Calmy-Rey defends the veil of discord,” was the headline in Tribune de Geneve on her return to Switzerland.

Christian Democrat opponents of Ms Calmy-Rey accused her of an “embarrassing prostration”, while Liliane Maury Pasquier, a fellow Social Democrat, asked: “Where is the solidarity with the women who fight against wearing the headscarf?”

The Foreign Minister was robust in her defence of the gas deal and swept aside American criticism: “Switzerland is an independent country that has its own strategic interests to defend,” Ms Calmy-Rey said.

Sources within the Swiss Foreign Ministry also pointed to America's continuing critique of Europe's dependence on Russian gas. “After this deal, we will be well diversified, with a third from the North Sea, a third from Russia and a third from Iran,” a source said.

EGL said the an initial delivery of Iranian gas was expected in 2009.

The Swiss Foreign Ministry said that it had anticipated the US State Department's reaction in regard to the Iran Sanctions Act. “We don't accept the extraterritorial application of American law . . . this is a contract to supply gas. It implies no investment in Iran,” the ministry said.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive