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VIENNA (Reuters) - Iran is believed to have started operating a long-delayed uranium conversion plant which it needs to fulfil an interim nuclear agreement reached with six world powers last year before it expires on Sunday, diplomatic sources said.
If confirmed, the facility's launch would signal Iran's commitment to the landmark Nov. 24 deal as it holds negotiations with the United States, Russia, France, Germany, Britain and China on a long-term settlement of the dispute over its atomic aspirations.
Those talks resumed in the Austrian capital two weeks ago and appeared likely - in view of still-wide differences - to be extended beyond a self-imposed July 20 deadline for reaching a comprehensive accord to curb Iran's nuclear program in exchange for an end to sanctions.
That would probably also mean last year's preliminary accord - under which Iran halted its most sensitive work and received limited easing of sanctions in return - will be prolonged.
Diplomats said it remained to be agreed on how to do that, suggesting this would be discussed over coming days.
"The idea is to keep the status quo. The same terms as now," one Western diplomat said. However, "nothing is decided and that will be the object of discussions."
The major powers want Iran to significantly scale back its uranium enrichment capacity to deny it any capability to quickly produce nuclear bombs. Iran says its activities are entirely peaceful and want crippling sanctions lifted quickly.
As one of the terms under the initial accord that runs for six months until July 20, Iran is supposed to convert a large amount of low-enriched uranium gas into an oxide form that would be less suitable for processing into bomb material.
To be able to do that, it has been building a facility near the central city of Isfahan for turning the gas into powder.
After months of delays, the U.N. International Atomic Energy Agency (IAEA) in May said the plant's commissioning had begun, but it was still not operating. Diplomatic sources said Iran later took preparatory action to start conversion, and that it was now believed to be working.
They said this still needed to be confirmed by the IAEA - which is monitoring compliance with the November agreement - in a monthly update due in a few days' time. Earlier IAEA reports have shown that Iran is meeting the deal's other requirements.
The half-year agreement was designed to buy time for talks on a permanent deal intended to remove the risk of a new Middle East war over Iran's nuclear ambitions. The aim was to strike an accord to replace the interim deal by Sunday.
However, after meetings in Vienna earlier this week between U.S. Secretary of State John Kerry and Iranian Foreign Minister Mohammad Javad Zarif apparently failed to yield a breakthrough, diplomats said more time would likely be required.
While Iran under the November agreement halted its most sensitive work, enrichment to a fissile concentration of 20 percent, it is allowed under the pact to continue producing uranium gas refined to up to 5 percent.
But, reflecting Western concern about this reserve, Iran undertook not to increase it so that it is not larger by the end of the half-year accord than what it was when it took effect on Jan. 20, Western diplomats have said.
Because of the conversion plant's delay, the low-grade uranium stockpile has grown to nearly 8.5 tonnes in May from 7.6 tonnes in February, according to IAEA reports. Experts say Iran would be able to convert a large amount in a relatively short time once the facility required for this is up and running.
Iran says it is producing low-enriched uranium to fuel a planned network of nuclear power plants, not to develop bombs. Uranium must be enriched to a high degree - about 90 percent fissile purity - for a nuclear weapon.
Experts say Iran potentially has enough of this kind of uranium gas for a few nuclear weapons if enriched much further. Limiting its overall enrichment capacity is one of the thorniest issues in the negotiations on a final deal.
Additional reporting by John Irish; editing by Andrew Roche