Quoted in the pro-reformist daily "Hayat No" (New Life), the Minister rejected recent criticisms that the National Iranian Oil Company (NIOC) had signed the contracts without sufficient study and under inappropriate terms.

The Ministry was also accused by a senior hard line cleric of "plunder", "kickbacks" and "corruption" involving "million and millions".

The Ministry immediately urged Mr. Jannati to provide all the names and bank names and accounts of the persons he alleged were profiting from the contracts signed with foreign firms, mostly French and Italians.

"I will ask the Judiciary Chief to follow up on the case and to announce the results after concluding the investigations", Mr. Jannati promised in return.

At the same time, deputy Oil ministers, in a meeting with Hojjatoleslam Mehdi Karroobi, the Speaker of the Majles (parliament", told him they would give the Majles an account of all foreign deals to the parliament (Majlis).

Mr. Namdar-Zanganeh’s unconvincing explanations came as oil industry sources expressed fear that as a result of the allegations, foreign oil firms would stop investing in Iran.

The war of attrition emerged in the country a day after Italian energy group Eni and Iran on Saturday evening sealed an oilfield contract worth one billion dollars in what will be the first test of extra-territorial U.S. sanctions under George W. Bush presidency.

But Iranian political analysts doubted the new feud between the reformists and conservatives would escalate further, as it might involve people very close to all senir clerical leaders, including Ayatollah Khameneh’I, former president Hashemi-Rafsanjani, former Speaker Ali Akbar Nateq-Noori etc etc.

Informed sources also said that Mr. Karroobi has started mediating between Mr. Jannati and Mr. Namdar-Zanganeh in order to burry the tomahawk.

According to Mr. Namdar-Zanganeh, the buyback deals did not involve concessions that are common in other forms of foreign investments, he told the paper, without emphasizing.

"Foreign investors in Iran's oil and gas development projects are responsible for reservoir engineering, providing finance and managing the projects" Hayat No cited the embattled Minister who, according to reports, would not keep the portfolio in President Khatami’s future cabinet.

Mr. Namdar-Zanganeh also noted that the foreign companies have also been obliged to engage Iranian companies in developing Iranian oil and gas fields. "That, besides slashing the costs of the schemes, could help the country acquire technological know-how in the field", he added.

Earlier also, a group of MPs had warned that Majlis may have to use its "legal right" and probe into the oil ministry if the latter ignores keeping the former privy to its controversial foreign buy-back deals.

Buy-backs, though largely unpopular with foreign firms, were resorted to in the mid-1990s in a bid to help the Iranian government skirt constitutional bans on foreign ventures and attract much-needed capital to revamp the ageing energy sector which was damaged by the Iraqi imposed war and ongoing U.S. sanctions.

Since 1997 Iran has pushed for greater foreign investment, and has attracted some 11.5 billion dollars in foreign buy-back deals in its oil and gas sectors, according to IRNA.