Russia could provide S-300VM Antey-2500 air defence missile system to Iran instead of S-300 missile.

The deal can be formalized during the visit of outgoing Iranian President Mahmoud Ahmadinejad to Moscow on July 1, an unnamed Iranian diplomat told Kommersant.

Iran was initially interested in the S-300 missile complexes, signing in 2007 a contract worth $800 million for five missile defense systems of this make.

But the deal was scrapped in 2010 by then-Russian President Dmitry Medvedev, who was unilaterally expanding on sanctions against Iran imposed by the UN Security Council.

Iran filed a $4bln lawsuit against Russia in the international arbitration court in Geneva, which is currently pending review.

Moscow has struggled to have the lawsuit dropped, including by offering the Tor anti-aircraft systems as replacement, media reported earlier this month, adding that the offer was rejected by Tehran.

The Antey-2500, however, may be a better solution. The system does not formally fall under the existing sanctions against Iran while still being useful for the Middle-Eastern country.

While the S-300 was developed for the use by missile defense forces, the Antey-2500 was specifically tailored for the needs of ground forces, which could also be an advantage for Iran, known for its large land force.

Russia is already exporting the Antey-2500, having delivered two missile systems to Venezuela earlier this year. India and Turkey were also named as potential buyers, though no deals were formalized so far, RIA Novosti reported.