"The Iranians fired at the rig's crane with machine guns,'' Tabanesku said. "They are in control now and we can't contact the rig.'' The Romanian company has 26 workers on the platform, he said.

Iran, which holds the world's second-largest oil and gas reserves, is due to respond today to a European Union-led offer of incentives aimed at persuading it to halt uranium enrichment activities that are crucial to its nuclear program.

Neither the press office of Iran's oil ministry nor the one of Iran's revolutionary guards could be reached for comment when called. Today is a national holiday in Iran.

Crude oil for September was at $72.56 a barrel, up 11 cents, on the New York Mercantile Exchange at 12:06 p.m. in London. The contract expires today. The more-active October contract was up 7 cents at $73.37 a barrel.

Straits of Hormuz

Iran urged the United Arab Emirates last week to help it return another oil rig owned and operated by the Romanian company in the same waters close to the Straits of Hormuz, through which 20 percent of the world's daily oil supply moves on tankers.

Grup said it recovered its rig last week because of a contractual dispute with its Iranian client, Oriental Oil Kish.

Iranian President Mahmoud Ahmadinejad suspended Oriental Oil's activities in 2005 on alleged corruption activity and ties to Halliburton Co. of the U.S. The U.A.E.-registered drilling company had signed a preliminary contract with Halliburton after winning an estimated $310 million contract to develop phases 9 and 10 of Iran's offshore South Pars gas reservoir.

Mircea Geoana, the head of the Social Democratic Party, the main opposition party in Romania, called on the government to "undertake all diplomatic measures necessary'' to persuade the Iranians to release the rig.

He also called on President Traian Basescu in a news conference broadcast on Realitatea television to invite all political party heads to the presidential palace to "discuss what Romania's reaction will be to this provocation.''.

To contact the reporter on this story: Andy Critchlow in Dubai at at acritchlow1@bloomberg.net

"We handed the response with a positive view and even tried to open a way for fair talks by interpreting the ambiguous cases logically and positively," he added.

The official also urged the six world powers who authored the package to get back to negotiations, adding that "the Islamic Republic is ready to play its role as a responsible country."

The chief negotiator made the remarks to envoys from China, Britain, France, Russia, Germany and Switzerland which is representing the United States since Washington has no diplomatic relations with Iran.

Earlier, Larijani handed over to foreign ambassadors in Tehran Iran's formal response to a package of proposals agreed on by six nations to solve the nuclear standoff without disclosing any details of the reply.

However, officials close to the meeting disclosed that the response had offered a "new formula" to resolve the disputed nuclear issue.

"Iran has given an all-sided response to the package, but also raised some questions," one of the officials said.

Meanwhile, U.S. ambassador to the United Nations John Bolton told reporters in New York that "we are ready to study the Iranian response carefully, but we are also prepared, if it does not meet the terms set to proceed here in the Security Council...with economic sanctions."

"I believe we are going to be prepared to submit elements of are solution in the Council very quickly," he added.

Iran has promised to give an official response by Tuesday to the package of proposals, which was authored by the United States, Russia, China, France, Britain and Germany.

The package, designed to defuse the current tensions over Iran's nuclear program, includes both incentives aimed at persuading Iran to suspend uranium enrichment and possible sanctions if Iran does not comply.

The Security Council adopted a resolution late June urging Tehran to suspend by Aug. 31 all enrichment-related and reprocessing activities, including research and development, or face the prospect of sanctions.

The U.S. has accused Iran of secretly developing nuclear weapons under a civilian front, a charge categorically denied by Tehran which says that its nuclear program is for peaceful purposes.

"I want to point out again that France is available to negotiate," Douste-Blazy said at a joint news conference with visiting Israeli Foreign Minister Tzipi Livni.

"As we have always said ... a return to the negotiating table is tied to the suspension of uranium enrichment," he stressed.

Iran's chief nuclear negotiator Ali Larijani on Tuesday gave Tehran's official response to the six-nation package of proposals on resolving the international nuclear dispute. But details of Tehran's response remain unclear at present.

"The United States, with Coalition support, has eliminated two of Iran's regional rival governments - the Taliban in Afghanistan in November 2001 and Saddam Hussein's regime in Iraq in April 2003 - but has failed to replace either with coherent and stable political structures."

The report, called Iran, Its Neighbours And Regional Crises, adds that the recent conflicts between Israel and the Palestinians in Gaza and between Israel and Hezbollah in Lebanon have added to that instability.

One of the report's authors, Dr Ali Ansari, reader in modern history at the University of St Andrews, told Radio Four: "The United States needs to take a step back and reassess its entire policy towards Iran and work out, first of all, what does it want and how is it going to achieve it because at the moment everything is rather like putting a sticking plaster on a fairly raw wound and it is not really actually doing much at all."

The report, in its executive summary, says Iran has now superseded America as the most influential power in the Middle East.

"Iran is simply too important - for political, economic, cultural, religions and military reasons - to be treated lightly by any state in the Middle East or indeed Asia," it says.

It says the wars and instability in Afghanistan and Iraq have "further strengthened Iran", adding that: "The US-driven agenda for confronting Iran is severely compromised by the confident ease with which Iran sits in its region."

Concerning Iran's apparent attempts to develop nuclear weapons, the report says the country's importance in the region "helps explain why Iran feels able to resist western pressure".

"While the US and Europeans slowly grind the nuclear issue through the mills of the International Atomic Energy Agency and the United Nations Security Council, Iran continues to prevaricate, feeling confident of victory as conditions turn ever more in its favour," it says.

"Russia will continue with its course of searching for a political solution to the situation surrounding the Iranian nuclear program, and will continue to seek to preserve the role of the IAEA and prevent the erosion of the nonproliferation regimen," he said commenting on Iran's response to the proposals of the international sextet of the UN Security Council's five permanent members and Germany. "The Russian side has started studying the Iranian reply along with its partners in the sextet," Kamynin said.

"It is essential to understand the nuances and to find constructive elements, if any exist, and to decide whether it is possible to go on working with Tehran on the basis of the well-known proposals of the six states," he said.

"We are ready to continue using multilateral mechanisms and the potential of the UN Security Council as well as bilateral contacts with the Iranian side" to find a political solution, he said.

Iran said Tuesday it was ready for "serious negotiations" on its nuclear program, but a semi-official news agency reported the government was unwilling to abandon nuclear enrichment - the key U.S. demand.

Ali Larijani, the country's top nuclear negotiator, delivered a written response to ambassadors of Britain, China, Russia, France, Germany and Switzerland to a package of incentives aimed at persuading Iran to roll back on its nuclear program. Larijani told the diplomats Iran was prepared as of Aug. 23rd to enter serious negotiations.

The U.S. ambassador to the United Nations, John Bolton, said Washington will "study the Iranian response carefully" but was prepared to move forward with sanctions against Tehran if it was not positive. The White House held off commenting until it had studied the text. The European Union's foreign policy chief, Javier Solana, said the document was "extensive" and required "a detailed and careful analysis."

Iranian officials offered no details of the response, but it appeared geared at enticing those countries into further negotiations by offering a broad set of proposals vague enough to hold out hope of progress in resolving the standoff.

If the Iranians leave the door open to halting enrichment as talks progress, that would drive a wedge in the Security Council between the Americans, British and French on one side and the Russians and Chinese on the other. Last month, Russia said the Council was in no rush to pressure Iran, striking a more conciliatory tone than the United States.

Tuesday's announcement was the latest development in the yearlong standoff over Tehran's nuclear program. Iran says it wants to master the technology to generate nuclear power. But critics say Iran is interested in uranium enrichment because it can also be used to make the fissile core of nuclear weapons.

The current drama is playing out in the wake of fears that the ability of the pro-Iranian Hezbollah guerrillas in Lebanon to withstand 34 days of Israeli bombardment has emboldened hard-liners in Tehran to risk a showdown with the Americans, who are bogged down in neighboring Iraq. There has also been speculation in the West that Iran encouraged Hezbollah to provoke the Israelis to distract attention from its nuclear ambitions.

Iran has pursued a confrontational stance on the nuclear issue since the election of President Mahmoud Ahmadinejad last year. The hard-line president has used the nuclear issue to encourage a sense of national pride among Iranians by standing up to the United States and other Western countries.

On Tuesday, Iran's top nuclear negotiator, Ali Larijani, hand-delivered his government's response to ambassadors of Britain, China, Russia, France, Germany and Switzerland - which represents U.S. interests - nine days before a Security Council deadline for Iran to halt uranium enrichment or face economic and political sanctions.

Larijani refused to disclose whether the response included an offer to suspend uranium enrichment. But the semiofficial Fars news agency reported that Iran rejected calls to suspend "nuclear activities" - or uranium enrichment - and "instead has offered a new formula to resolve the issues through dialogue."

The state-run television quoted Larijani as telling the diplomats Iran "is prepared as of Aug. 23rd (Wednesday) to enter serious negotiations" with the countries that proposed the incentives package.

The Irna official news agency reported that "Larijani said Iran's answer has logically, fairly and constructively addressed demands of the proposed package, recommending the P5+1 group to return to the negotiation table immediately despite the false atmosphere created against Iran that it was buying time."

Last month, the Security Council set an Aug. 31 deadline for Iran to halt uranium enrichment or face economic and political sanctions. Iran called the resolution "illegal" but had said it was willing to offer a "multifaceted response" to an incentives package that the six powers offered in June.

Iranian officials familiar with Larijani's response said Tehran offered a "new formula" to resolve the dispute. The officials spoke on condition of anonymity because of the sensitivity of the information.

"Iran has provided a comprehensive response to everything said in the Western package. In addition, Iran, in its formal response, has asked some questions to be answered," one official said without providing more details.

But the Iranians have been signaling they are not prepared to abandon uranium enrichment as a precondition to talks. Last month, a senior Iranian lawmaker said the country's parliament was preparing to debate withdrawal from the Nuclear Nonproliferation Treaty if the U.N. Security Council adopts a resolution to force Tehran to suspend enrichment.

On Monday, Iran's supreme leader, Ayatollah Ali Khamenei, said the Islamic Republic "has made its own decision and in the nuclear case, God willing, with patience and power, will continue its path." Khamenei accused the United States of putting pressure on Iran despite Tehran's assertions that its nuclear program was peaceful.

Iran's former foreign minister Ali Akbar Velayati, who is now a top adviser to Khamenei, said Iran's national interests, not the West's demands, should be the basis for Iran's decision.

"What we have achieved in nuclear technology is worth more than the pressures against us at the international stage," the semiofficial Iranian Students News Agency quoted Velayati as saying Tuesday.

In February, Iran for the first time produced its first batch of low-enriched uranium, using a cascade of 164 centrifuges.

In the last few weeks, Iran prevented U.N. nuclear agency inspectors from inspecting an underground site meant to shelter its uranium enrichment program from attack, diplomats said Monday.

The head of the International Atomic Energy Agency, Mohamed ElBaradei, is to report by Sept. 11 to the agency's board on Iran's compliance with the U.N. deadline to freeze enrichment and other aspects of Tehran's cooperation with U.N. inspectors.

The Western incentives package has not been made public but some details have leaked. They include an offer to lift a ban on sales of Boeing passenger aircraft, providing Iran with some nuclear technology to build reactors for civilian purposes and guaranteeing a supply of nuclear fuel.

The radio said Eitan, a former spymaster, meant that Israel should prepare its bomb shelters to protect against a possible Iranian attack.

It quoted Eitan as alluding to the current international standoff with Iran over its uranium enrichment, saying if the situation deteriorates, Israel would be the first to come under attack.

Iran's President Mahmoud Ahmadinejad has called for Israel to be "wiped off the map."

He has said Israel "should not assume" its cease-fire with Iranian-backed Hezbollah guerrillas last week means an end to the crisis.

Hezbollah fired 4,000 rockets on northern Israel during the war.

Iranian cleric Amad Khatami has said that Iran would hit Tel Aviv with medium-ranged missiles if it came under attack. Arms experts say Iran's Shahab-3 missiles are capable of striking Israel.

Eitan's remarks also came as tensions rose between Iran and six world powers led by the United States, who have sought to persuade Tehran to halt its uranium enrichment program, with an August 31 deadline for Tehran to face possible sanctions from the United Nations.