Iran plans to issue euro and rial denominated bonds worth a total of about $9.7 billion in the 2010-11 year to help finance energy projects, a senior oil official was quoted as saying.

The Oil Ministry will issue five billion euros ($6.67 billion) of bonds, as well as rial bonds worth the equivalent of around $3 billion, said Hojjatollah Ghanimifard, a deputy director of the National Iranian Oil Company (NIOC).

He was referring to planned issues in the Iranian year that ends next March.

Apart from 2 billion euros to be used in general energy projects, the amount raised would fund development of the South Pars natural gas field in the Gulf.

Ghanimifard's comments, reported by the ISNA news agency, underlined Iran's need of capital to help expand and modernise its all-important energy sector.

The planned issues represent a rare bid by the Islamic Republic, which is under U.N. and U.S. sanctions over its disputed nuclear work, to raise capital in international markets.

Analysts say particularly Western companies are increasingly wary of investing in the major oil producer due to the nuclear dispute.

Iran has the second-biggest gas reserves in the world after Russia, but sanctions and other factors have slowed its development as an exporter.

Iran has given Royal Dutch Shell  and Repsol one week to decide on their involvement in South Pars, the semi-official Mehr news agency reported on Monday.

Iran says both the Anglo-Dutch Shell and Spain's Repsol have procrastinated on finalising their involvement in the field, the world's largest reservoir of gas. It has set similar deadlines in the past as a way of pressuring foreign investors.

The head of the state Pars Oil and Gas company, a NIOC subsidiary, earlier said it planned a 3 billion euro bond issue soon as well as a rial bond issue worth the equivalent of $3 billion. He was referring the same bond issues as Ghanimifard.

Pars Oil and Gas said last month that it had started offering bonds in a planned 1 billion euro offering. Ali Vakili said 25 per cent of that issue had been sold so far, and the rest would be issued next week.

Iran has increasingly shifted to Asian countries to develop its oil and gas fields, where firms are less susceptible to Western pressure to stay away from the Iranian market and are eager for energy supplies to feed future growth.

Press TV, Iran's English-language television, said on Monday Iran was cutting red tape and easing ownership rules to encourage foreign investment in stocks and bonds.

Tehran says its atomic work is for peaceful purposes and will not be halted. – Reuters