Iran's parliament is due to debate a bill on Sunday that would cut off oil supplies to the EU in a matter of days, in revenge for a decision last Monday by the 27 EU member states to stop importing crude from Iran as of July 1.

"Generally, the parties to incur damage from the EU's recent decision will be European companies with pending contracts with Iran," Ahmad Qalebani, head of the National Iranian Oil Co. told the ISNA news agency.

"The European companies will have to abide by the provisions of the buyback contracts," he said. "If they act otherwise, they will be the parties to incur the relevant losses and will subject the repatriation of their capital to problems."

By turning the sanctions back on the EU, Iranian lawmakers hope to deny Europe the six-month window it had planned to give those countries most dependent on Iranian oil - including some of the most economically fragile - time to adapt.

The EU banned imports of oil from Iran on Monday and imposed a number of other economic sanctions, joining the United States in a new round of measures aimed at deflecting Tehran's nuclear development programme.

Under buyback contracts, a common feature of the Iranian oil industry, investments in oil field projects are paid back in oil, often over many years.

Italy's Eni says it is owed $1.4-1.5 billion in oil for contracts in Iran dating from 2000 and 2001 and has been assured by EU policymakers its buyback contracts will not be part of the European embargo but the prospect of Iran acting first may put that into doubt.

The EU accounted for 25 percent of Iranian crude oil sales in the third quarter of 2011.

(Writing by Robin Pomeroy; Editing by David Stamp)

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