MOSCOW, December 17, 2007 (RIA Novosti) - The first shipment of nuclear fuel has been delivered to Iran's Bushehr nuclear power plant, Russia's state nuclear agency said on Monday.

The $1 billion plant in southern Iran is being built by Russia under a contract signed in 1995.

"Containers with fuel sealed by IAEA [International Atomic Energy Agency] inspectors have been delivered to the site and placed in a special storage facility subject to international safety monitoring," Rosatom said.

A spokesperson for Russia's nuclear power equipment and service export monopoly, Atomstroyexport, said the first stage of deliveries had started on Sunday and would see 163 main and 17 reserve arrays of uranium, enriched to 3.62% of U-235, delivered to the plant.

The delivery to the plant came following months of project delays which Moscow had attributed to payment arrears, but Iran blamed on pressure from Western nations.

The Islamic Republic has been suspected of seeking to build nuclear weapons under the cover of a civilian nuclear program. The United States and its allies have pushed for measures to force Tehran to halt uranium enrichment, which is used in both electricity generation and weapons production. Iran insists it needs nuclear technology to generate electricity.

Russia's Foreign Ministry said on Monday the start of nuclear fuel supplies to Iran means the country has laid the foundations to restore trust in its nuclear program.

"We believe that entirely new conditions have been created, allowing Iran to take steps to restore trust in the peaceful nature of its nuclear program," the ministry said in a statement.

The ministry said Iran had provided additional written guarantees that the fuel would be used solely for electricity generation.

"This includes the suspension of uranium enrichment activities, as Iran will not need its own enrichment facility in the mid-term," the Foreign Ministry said.

But the Reuters news agency quoted a high-ranking Iranian government source as saying that the country was not set to stop its enrichment program.

Russian nuclear officials earlier said that fuel for Bushehr would not exceed the uranium enrichment level achieved by the Iranians. The IAEA said Iran has enriched uranium to a level of 3.7% of U-235, insufficient for producing nuclear weapons, which would require a level of around 90%.

Under a Russian-Iranian agreement on Bushehr, nuclear fuel deliveries to the plant start about 6 months ahead of its commissioning. The ministry said supplies would continue into February 2008.

Spent Russian fuel is to be re-exported for reprocessing and storage, according to the agreement. In Iran, the nuclear fuel will be under UN control, the ministry said.