South Korean Prime Minister Chung Sye-kyun arrived in Iran on Sunday, a report said, as Seoul seeks to improve relations with Tehran amid lingering tension over Iranian funds frozen in Korea under US sanctions.

Chung's three-day trip to Tehran came days after Tehran released a Korean oil tanker and its captain three months after its seizure over alleged oil pollution, paving the way for better bilateral relations.

The Islamic Republic News Agency (IRNA) reported that Chung is slated to meet with top Iranian officials, including President Hassan Rouhani, First Vice President Eshaq Jahangiri and Iranian Parliament Speaker Mohammad-Baqer Qalibaf.

During the meetings, Chung is expected to discuss ways to enhance relations between the two countries and the issue of Iran's funds -- worth $7 billion -- frozen in Korean bank accounts, observers said.

The two countries have been consulting over how to release part of Iran's funds through a Swiss humanitarian trade arrangement designed to facilitate the flow of humanitarian goods to the Iranians.

The release of the oil tanker last week raised speculation that Seoul and Tehran might have made some headway in their consultations on the frozen money issue.

Chung also plans to meet with officials of South Korean companies operating in Iran, including Samsung Electronics, LG Electronics Inc. and SK Networks Co.

In August 2017, Chung visited Iran as then speaker of the National Assembly. A South Korean prime minister last visited the country in 1977. (Yonhap)