Russia and Iran have agreed to discuss next month a contract for Tehran to export two percent of its annual oil production in apparent circumvention of sanctions imposed over its nuclear drive.

The controversial deal is just a tenth of the size of that envisioned by the two close partners last year and appears to be aimed at shielding Russia from additional punitive steps imposed by the United States for violating international restrictions on the Islamic state.

"This format of cooperation does not violate our existing international obligations," Russian Energy Minister Alexander Novak said.

Russia's energy ministry said on Tuesday it had signed a memorandum of understanding with a visiting Iranian delegation that paves the way for contract talks to begin on September 9 in Tehran.

The five-year framework agreement covers "the construction and reconstruction of (Iranian power) generation capacities, electricity supply network infrastructure development, as well as oil and gas," the ministry said in a statement.

It added that Russia was also hoping to supply Iran with automobiles and equipment and well as consumer and agricultural goods.

Russian and Western media reports late last year said the barter deal would see Iran export of up to 500,000 barrels of oil per day (25 million tonnes per year).

But Moscow's Kommersant daily cited sources saying the discussions now focused on Russia's purchase of about 70,000 barrels of oil per day -- a fraction of the 3.2 million barrels per day the US Energy Information Administration believes Iran produced last year.

Kommersant said Russia would purchase the oil "at a small discount" to the price of Europe's benchmark Brent crude rate.

Russia intends to earn extra proceeds from selling the oil on to friendly energy-starved nations such as China at global prices.

Novak said on Wednesday that final oil volumes "will be determined by market needs".

- Ukraine factor -

President Vladimir Putin and his Iranian counterpart Hassan Rouhani are expected to put the finishing touches on a final deal on the sidelines of regional summits to be held in Tajikistan on September 11 and the southern Russian city of Astrakhan on September 29.

Top Russian officials have long argued that such deliveries would not break UN sanctions imposed over Iran's alleged ambition to use its fast-expanding nuclear programme to develop a nuclear bomb.

Washington and EU nations have imposed their own restrictions, which also penalise countries and companies dealing in certain areas with Iran.

The White House in January expressed "serious concern" over the rumoured Russian deal because the quantities under initial discussion would have boosted Iran's oil exports by more than 50 percent.

Iran analyst Rajab Safarov said Russia had decided to scale back the size of the contract because it could not longer rely on a pipeline that runs through crisis-hit Ukraine.

Kiev last year was ruled by a Russian-backed administration that was ousted in February.

"When the initial amounts were being discussed, Russia's relations with Ukraine were not under such strain," Safarov told AFP.

The analyst said Russia had intended to ship the Iranian oil through Ukraine to oil refineries in Belarus. The Kremlin's ex-Soviet ally now receives most of its crude from Moscow at a discount.

Russia would have then have been able to sell any spare oil to its international partners at a much higher prices.

"But now, logistically, this does not work," said Safarov.