Japan and Iran will start negotiations on an investment accord once sanctions are lifted following last month's landmark international deal on Tehran's nuclear program, the Nikkei reported on Wednesday, citing Japanese government sources.

Initial talks are being held between the two countries to prepare for the lifting of sanctions and begin formal negotiations, the business daily said, without identifying the sources.

Japan is keen to boost ties with Iran and invest in resource projects in the country, as well as return imports of Iranian oil to about 10 percent of the total from 5 percent now after sanctions forced Japanese refiners to cut purchases, it said.

Earlier this month, Daishiro Yamagiwa, vice-minister of Japan's Ministry of Economy, Trade and Industry (METI), visited Tehran and met top government officials, accompanied by executives from the oil, gas and other industries.

Yamagiwa did not discuss an investment agreement, Shigetoshi Ikeyama, a director in METI's Middle East and Africa division, said when contacted by Reuters about the Nikkei report.

"Knowing that Japanese companies are interested in boosting economic ties in future, state minister Yamagiwa had general discussions on streamlining the environment for that, but did not discuss an investment pact in particular," Ikeyama said, adding that the Ministry of Foreign Affairs would take the lead on any discussions on specific agreements.

"Another reason for Yamagiwa's visit was to avoid being beaten by European and U.S. companies," Ikeyama said.

Officials at the foreign ministry were not immediately available for comment.

Inpex Corp (1605.T), Japan's biggest energy explorer, JGC Corp (1963.T), an engineering company, and trading houses Mitsubishi Corp (8058.T), Mitsui & Co (8031.T) and Itochu Corp (8001.T) joined Yamagiwa on the visit, the Nikkei said.

A spokesman at Inpex, which in 2010 was forced to give up a stake in Iran's Azadegan oil field because of the sanctions, confirmed some of its officials had accompanied Yamagiwa and said the explorer was monitoring the situation.

Itochu and JGC also confirmed they were in the delegation but Mitsui did not respond immediately to a query on the matter. A Mitsubishi official had said earlier that it planned to send an official along with Yamagiwa.

Senior government ministers from Italy, France, Germany and Serbia have been among those making the trek since the July 14 accord, which raised the prospect of banking and trade sanctions on Iran being lifted, possibly by the end of this year.

Last month Iran outlined plans to rebuild its main industries and trade relations following the nuclear agreement with world powers, saying it was targeting oil and gas projects worth $185 billion by 2020.

By This article was written by Aaron Sheldrick for Reuters on AUG. 19, 2015.