Ahmadinejad said on Friday that creating obstacles for Iran's development with sanctions was "a childish idea and a big mistake," the official IRNA news agency reported.

"We don't need anyone... We rely on our own abilities," Iran's Press TV quoted him as saying in the southern Gulf port of Assaluyeh.

"God willing, the Iranian nation's advancement is gaining speed," he said while officially launching a natural gas project.

Ahmadinejad described Friday's opening of two phases of the South Pars field - Iran's single biggest natural gas deposit - as a "happy gift" for the Iranian nation, which is also the world's fourth-largest oil producer.

Rules of engagement

Since taking office in January, Obama has talked of engaging with Iran on its nuclear work and other issues, breaking with the policy of his predecessor, George Bush.

But he has also warned of more sanctions if Iran does not stop enriching uranium, which has both military and civilian uses.

The Obama administration intends to invite Iran to a conference on Afghanistan [AFP]
 
Iran has repeatedly ruled out halting such activity, which it says is aimed at generating electricity, and dismissed the impact of both US and UN sanctions.

Analysts, however, say Iran is facing growing economic problems after oil prices plunged about $100 a barrel from a peak of $147 in July as the global economic downturn hit fuel demand.

The Iranian government has reacted cautiously to Obama's outreach, saying it wants to see real change in US policy after Bush spearheaded a drive to isolate the Islamic Republic.

Iran sits on the world's second-largest gas reserves after Russia, but has been slow to develop exports.

Many Western energy firms have become wary of investing in Iran because of the sanctions. Asian firms have snapped up some projects and are looking at others.

The US cut diplomatic ties with Iran during the 1979-81 hostage crisis, in which a group of Iranian students held 52 US diplomats hostage at the US embassy for 444 days.

Sanctions, which have been extended on an annual basis by successive presidents, include prohibiting US companies from aiding the development of the Iranian oil industry and halting trade and investment ties with Iran.

The Obama administration intends to invite Iran to an international conference on its neighbour, Afghanistan, this month, Hillary Clinton, the US secretary of state, announced last week.

Iran has said it is prepared to consider the invitation.