Iran's national oil company NIOC and Italian power utility Edison have signed a $107 million contract to help develop an oil exploration block in the Gulf, state television said.

The 8,500 square kilometre-Dayyer offshore block is situated in the Gulf, it said without giving details.

Iran is the world's fourth-largest crude producer but analysts say it needs major foreign investment and expertise to substantially expand oil output.

It is attempting to lure international oil and gas companies to invest, despite US pressure over its nuclear ambitions, and has been promoting an international exploration tender for 17 onshore and offshore blocks.

Soaring oil and gas prices have made energy supply an acute issue in Italy, which has scarce energy resources and depends on imports for about 80 per cent of its energy needs.

On Dec.23, Iranian Oil Minister Gholamhossein Nozari said Iran was in talks with Edison about exporting gas to Italy. The United States, leading efforts to isolate Tehran over its disputed nuclear programme, has urged international companies to avoid doing business with Iran.

Italy is one of Iran's largest trading partners and the head of Italian oil major Eni said in November it will not abandon its contracts in the Islamic state.

Iran says its nuclear work is peaceful and aimed at generating electricity so that it can export more oil and gas.-Reuters