The Iranian Oil Ministry yesterday rejected Iraq's proposal to pay for imported gas using the Iraqi dinar, Iran's semi-official ISNA news agency reported a ministry official as saying.
"National Iranian Gas Company doesn't agree with the suggestion," Deputy Oil Minister Amir-Hossein Zamaninia said, adding that "negotiations are still under way".
"According to the contract, Iraqis should pay for the gas imports in euros," Zamaninia said.
The Iranian official has also denied reports claiming that Tehran accepted an Iraqi proposal to pay in "humanitarian goods and food" for the imported Iranian gas.
"The reports that Iraq is to give humanitarian goods and food in exchange for Iran gas… are not true," Zamaninia said.
Earlier, the US State Department said Washington has exempted Iraq from sanctions imposed on Tehran, allowing Baghdad to continue buying electricity from Iran.