An Iranian Oil Ministry source played down a report that Indian oil buyers had started paying for their crude through a bank in Russia as a new way to get around sanctions-related difficulties in making international bank transfers.

The semi-official Iranian Mehr news agency said that importers in India - Iran's second biggest oil customer after China - were paying off oil debts through Gazprombank.

'There has been no word of this at all. No name has been mentioned, not Gazprom nor any other particular bank. These news reports are not valid,' said the ministry source.

Indian customers accumulated debts of some $5 billion in the first half of this year when the Reserve Bank of India scrapped a long-standing payment system, under pressure from Washington which is trying to isolate the Iranian economy.

In the Mehr report, Mohsen Qamsari, deputy head of the National Iranian Oil Company, said Tehran had 'reached new agreements for receiving money for Iran's oil exports'.-Reuters