By Mark Heinrich
VIENNA (Reuters) - Iran has slightly reduced the scale of its nuclear fuel production work and has fulfilled demands for more effective monitoring of its Natanz uranium enrichment site, the U.N. atomic watchdog said Friday.
But Iran also raised the number of installed, though not all enriching, centrifuge machines by some 1,000 to 8,308, a confidential International Atomic Energy Agency report obtained by Reuters said.
This would allow the Islamic Republic to resume a major expansion of enrichment if it chose, barring technical problems, U.N. officials familiar with the report said.
The report will form the basis for six-power talks on September 2 to look into harsher U.N. sanctions on the Islamic Republic.
Iran's gesture of cooperation with the IAEA could make it harder for the United States and three big European allies to persuade Russia and China, major trade partners of Tehran, to agree on steps to squeeze its lifeblood oil sector.
The West suspects Iran is pursuing the means to produce atomic bombs under cover of a civilian nuclear fuel program.
Iran says it wants only electricity from nuclear power and has again rejected U.N. demands for a halt despite new fissures in its leadership over post-election unrest. It has also stymied an IAEA probe into alleged covert nuclear weapons research.
The report said Iran was enriching uranium with about 400 fewer centrifuges than the almost 5,000 operating at the time of the last IAEA report. It did not say why, but a senior informed diplomat told Reuters earlier a number of machines had been taken down for maintenance or repairs.
Iran's reported stockpile of low-enriched uranium had increased to 1,508 kg, almost 200 more than in May, the report said. U.N. officials said the output rate had stagnated because of the fewer number of machines on stream.
They could not rule in or out that Iran's apparent nuclear slowdown had anything to do with popular unrest over alleged election fraud racking the country since June.
A relative moderate advocating nuclear dialogue with big powers took charge of the Iranian nuclear energy agency in July.
The accord on better camera surveillance and data collection at Natanz came after the IAEA complained that Iran's vast expansion of centrifuge operations since 2008, without corresponding monitoring upgrades to keep pace, left them unable to verify nothing was being diverted for military purposes.
The report said Iran also allowed inspectors to revisit the Arak heavy-water reactor site this month after barring access for a year, but this was a one-off and Tehran had not resumed providing design information to the IAEA.
It said Iran told the IAEA the complex was 63 percent complete and the reactor vessel would be installed in 2011.
Western officials are concerned the Arak site could be put to use making weapons-grade plutonium grew after its roof was installed, foiling monitoring with satellite imagery. Iran says it will only produce isotopes for medicine and agriculture.
(Editing by Andrew Roche)
