Iran has said it is under no obligation to award the contract to develop its Farzad B gas field to India.
This development comes after India said it's willing to invest nearly $11bn to develop the gas field, which was discovered by a consortium of Indian companies, led by the state-owned Oil & Gas Natural Corporation (ONGC) in 2008.
Tehran has also rejected India's threat of reducing oil imports from Iran.
Iran signed a basic agreement to develop the gas field with Russian energy giant Gazprom in May.
The move was in retaliation to India's threat to cut imports of Iranian oil if the contract for Farzad B wasn't given to it.
Last month, India said Tehran should reciprocate the faith shown by it in buying oil from Iran even though it faced international sanctions.
The Iranian parliament's energy commission chief Asadollah Gharekhani said both Iran and India had decided to conduct joint feasibility studies on the Farzad B field, which were completed.
"However, no decision was made that would suggest the project to develop the field should necessarily be contracted out to India," Gharekhani said was quoted by a media report as saying.
The issue has strained India's diplomatic relation with Iran to an extent.
Gharekhani also said the Indian consortium could've received priority on Farzad B. But if other companies ordered better terms when it comes to investment and technology, Iran would be free to select the firm best serving its national interests.
He also said Iran suffered losses selling oil to India and receiving payments in Indian Rupees during the economic sanctions period.