TEHRAN (Fars News Agency)- Iran and China moved a step closer to signing an energy deal worth as much as $100 bln, with the Islamic republic saying it invited China Petrochemical Corp.’s managing director to Tehran to sign an accord first reached in 2004.
The contract for Sinopec Group, as China Petrochemical is known, to develop Iran’s Yadavaran oil field and secure oil and gas supplies over a 25-year period, is complete and ready to be signed, said the Iranian oil ministry press agency Petroenergy Information Network.
Iran, under US economic sanctions and at odds with the US and the EU3 (France, Germany and England) over its nuclear activities, seeks friendlier markets. China and Russia said on Oct. 26 they would oppose a draft resolution imposing United Nations sanctions on Iran for its nuclear program. No resolution has been passed since.
“All elements of the contract have been finalized and it is in the final process for signing by Sinopec,” National Iranian Oil Co. President Gholamhossein Nozari was quoted as saying by the agency yesterday.
Under the initial deal signed by Sinopec, China would pay Iran as much as $100 bln over 25 years for the oil and gas purchases and for a 51% stake in the Yadavaran oil field, in Khuzestan province near the border with Iraq.
The deal would allow China to buy 150,000 barrels of Iranian crude a day at market rates for 25 years as well as 250 mln tons of liquefied natural gas.
Royal Dutch Shell Plc, which has worked as a technical consultant for Sinopec on the Yadavaran oil field, will participate in the field’s development, Iran’s oil ministry said in September. Shell officials have said the company is seeking a 20% stake in the field.
Iran’s constitution forbids foreigners from holding rights to natural resources. Instead, foreign firms may have “buyback agreements” to finance the development of reserves, hand them over to Iranian control and then recover their investment at an agreed rate of return from subsequent production.
Sinopec, China’s second biggest oil company, on July 31 signed a contract worth 2.17 bln euros ($2.84 bln) with Iran to expand the capacity of the nation’s refinery in Arak.
Iran is negotiating with several other Chinese companies to develop its energy sector. It’s holding talks with Cnooc Ltd., China’s biggest offshore oil producer, about developing the North Pars gas field in the Persian Gulf, Iran’s oil ministry said last month. In exchange for developing the field, Cnooc may be able to sell liquefied natural gas from two of the field’s four phases over a 25-year period.
State-owned China Power Investment Corp., one of China’s top five electricity groups, is close to signing a $1.8 bln deal to build gas-fired power plants in Iran.
The Yadavaran oil field, with estimated reserves of 3 bln barrels, will likely produce 300,000 barrels a day, or about the same volume China imports from Iran, said Petroenergy.
China Petrochemical is parent of overseas listed China Petroleum & Chemical Corp., Asia’s largest refiner.