The report comes just weeks after an announcement that the United States had agreed with the European Union to waive US Sanctions on European, Russian and Malaysian firms involved in a $2 billion phased development of Iran's neighbouring South Pars gasfield.

"MEES understands that Royal Dutch-Shell has reopened discussions with NIOC regarding the development of the offshore North Pars gasfield," the Cyprus-based newsletter reported.

"As a next step in its North Pars development efforts, Shell has proposed a follow-up study, to be undertaken in conjunction with NIOC," MEES reported.North Pars could cost up to $2 billion to tap its gas reserves of some 47 trillion cubic feet, industry sources said.

MEES reported in April that Shell had decided to actively pursue oil and gas business opportunities in Iran includingthe go-ahead to draw up a framework contract to further develop the export-orientated South Pars gas field which holds 321 trillion cubic feet of gas.

Shell Group managing director Mark Moody-Stuart responded to that report by saying the Anglo-Dutch firm had always had an interest in Iran and would continue to talk to the Islamic Republic.

Gas from North Pars, located 15 km (nine miles) off the Iranian coast, would be primarily re-injected into Iran's ageing onshore oil fields which need additional gas pressure to lift oil output and prolong field life.

These fields are seen as critical if Iran is to retain its position as the world's third largest oil exporter after Saudi Arabia and Norway, industry sources said.

The follow-up study, which could take as long as a year to complete, would decide which onshore fields would benefit most from a re-injection of gas from North Pars.

Shell carried out an extensive joint study on North Pars in 1993 but talks on developing the giant field reached an impassein 1994 over how Shell would be paid for its investment.

Another issue that would have to be resolved before the project left the drawing board would be how Shell would be paid for its investment as the Iranian constitution rules out any foreign equity ownership of its oil and gas reserves.

Though North Pars has large gas reserves the field contains a low ratio of associated light oil known as condensates which under previous plans would be the source of Shell's remuneration for its investment.

Shell's previous North Pars development was based on three production modules, each with a capacity of 1.2 billion cubic feet a day.

"Sour gas from the first 1.2 billion cubic feet a day of production phase was to be used for gas injection into the Gach Saran, Bibi Hakimeh and Binak oilfields while output from the second and third phases...to undefined domestic or export markets," MEES reported.

Iran is expected next month to offer a host of oil and gas development projects worth potentially billions ofdollars. Iran has pressed ahead with its offer against the background of the 1996 US Iran-Libya Sanctions Act (ILSA) which has the potential to slap sanctions on foreign firms that invest more than $20 million a year in Iran's energy sector, it was emphasised.

Foreign firms, notably France's Total SA, have ignored the threat of sanctions and signed up "buy-back" deals with NIOC to develop Iranian oil and gas fields.