Iranian hydrocarbon reserves, under-exploited since the 1979 Islamic revolution, are among the world's largest.

But Tehran's ambition to host a major pipeline to transport landlocked Caspian Sea petroleum to Iran's Gulf export terminals will have to wait for warmer relations with the United States, the analysts said.

"Iran needs British trade and British support for developing its economy and wants to get British and western support for the building through Iran of some of the oil and gas pipelines that will come out of central Asia and the Caspian," Fred Halliday of the London School of Economics told the BBC.

Iran and Britain hope to quickly exchange ambassadors after Tehran at a meeting of foreign ministers dissociated itself from a death threat against British author Salman Rushdie.

British oil companiesincluding British Petroleum, Shell, Lasmo, and Enterprise have all expressed interest in the multi-billion dollar projects offered to international investors earlier this year by Iran. "We welcome any improvement between Iran and the West, in this case the UK," said a spokesman for Shell in London. "We can reconfirm that we are interested in pursuing business opportunities in Iran."

Shell has its eye on one of the world's largest gasfields, South Pars, where France's Total in 1997, ignoring the threat of secondary sanctions from the US Iran-Libya Sanctions Act, stole a March with a deal for development of the early stages of Pars.

British trade with the Islamic Republic could soar if its companies can emulate the Total project.

A British trade mission organised by the Department of Trade and Industry and led by BP, centring on oil and related services, will travel to Tehran in October for a trade fair.

In recent years British exports to Iran have been worth some 400 million stg ($680 million) a yearwith about half attributed to British companies providing parts for Iran's oil and gas industry.

The end of the Rushdie affair now centres attention squarely on Iranian relations with the United States.

Iran's new moderate president Mohammad Khatami has already made surprising progress in trying to clear the minefields obstructing better relations with the West against stubborn resistance from his conservative opponents.