The 31-year-old will soon enter the final 12 months of his existing deal with the Premier League champions and has been persistently linked with a departure over the past year.
Mahrez struggled for regular starts in the Premier League under Pep Guardiola last term, making the first XI on just 15 occasions in the top flight, but he was a key player nonetheless.
The former Leicester City man struck 24 goals and provided nine assists in 46 appearances for Man City across all competitions, including seven goals in the Champions League.
The report adds that City are only prepared to extend Mahrez's stay for a 'short-term' period, the length of which is unspecified, but there is optimism that a deal can be struck.
Mahrez has supposedly attracted the interest of several clubs after his stellar 2021-22 season, but he will seemingly stay on at the Etihad for at least another 12 months.
Man City paid Leicester City £61m for the transfer of Mahrez in the summer of 2018, and the Algerian has since scored 63 goals and provided 46 assists in 189 games for the Etihad outfit.
The former Le Havre attacker has won three Premier League titles, three EFL Cups, one FA Cup and two Community Shields under the tutelage of Guardiola, adding to his memorable 2015-16 top-flight success with Leicester.
The former Morocco international will reportedly be allowed to leave Stamford Bridge for the right price this summer after making just 14 Premier League starts in 2021-22.
Meanwhile, Mahrez will seemingly have less competition on the right-hand side of the Man City attack next term as Gabriel Jesus closes in on a £45m transfer to Arsenal.
The 25-year-old has agreed terms on a five-year deal with the North London club and departs after a five-and-a-half year spell in Manchester, as Julian Alvarez and Erling Braut Haaland arrive to compete for the striker's spot. body check tags ::