* Revolutionary Guards' influence appears to be growing
* Engineering unit head says upstream oil sector a priority
* Says foreign firms "afraid" of being replaced
TEHRAN, Dec 15 Iran's Revolutionary Guards have replaced of foreign firms in some projects in the major oil producer, a senior commander said in comments published on Tuesday, a sign of the elite force's growing economic clout.
But Rostam Qassemi, who heads the Guards' Khatam al-Anbia engineering unit, dismissed claims that it controlled most of the Islamic Republic's construction and other development projects, business daily Donya-ye Eqtesad reported.
"We are witnessing a ballyhoo these days, both inside and outside the country, over the Guards economic activities," he was quoted as telling a news conference, adding "foreign firms were afraid of being replaced by local companies" in projects.
But Qassemi added: "the volume of projects run by Khatam al-Anbia is only four percent of all projects in the country."
Analysts say the political and the economic influence of the Guards appears to have grown since hardline President Mahmoud Ahmadinejad, himself a former Guardsman, came to power in 2005.
The force played a key role in quelling street unrest that erupted after Ahmadinejad's disputed re-election in June.
In September, Iranian media said a consortium affiliated to the Guards bought 50 percent plus one share in the state telecommunications company for around $7.8 billion.
Qassemi said his unit has replaced big foreign firms such as Total (TOTF.PA) and Shell (RDSa.L) in some projects, the newspaper reported. It did not make clear whether this was because they had pulled out or because of other reasons.
Western firms are becoming increasingly wary of investing in Iran, the world's fifth-largest oil exporter, due to an international row over its nuclear programme. The West suspects Iran aims to develop nuclear bombs. Tehran denies this.
OIL SECTOR TOP PRIORITY
Qassemi said Khatam al-Anbia had won 10 percent of the some 200 tenders it had taken part in since last March. "The oil industry's upstream projects are our top priority to enter because the private sector has not entered yet."
"Over 99 percent of our projects were gained through official tenders, such as South Pars phases 15 and 16," Qassemi said, referring to a major natural gas field in the Gulf.
"The other projects were given by the government to Khatam al-Anbia because of either security reasons or because of high risks in the projects."
Earlier this month, an Iranian official denied a report that Tehran had stopped talks with France's Total over investment in another section of South Pars, phase 11.
The Guards was heavily involved in reconstruction after the 1980-88 Iran-Iraq war and expanded its work to cover areas such as import-export, oil and gas, defence, transport and construction.
The force has become a major contractor, with ties to firms controlling billions of dollars in business, construction, finance and commerce, the U.S. Treasury has said.
Qassemi cited security issues as the main reason why Khatam al-Anbia was involved in a planned pipeline transporting Iranian gas to Pakistan, saying four staff had been killed in a volatile region. But, he said, "we have not entered into the field of atomic energy yet." (Writing by Fredrik Dahl; editing by Samia Nakhoul)