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Iran seeks to sign key oil deal with China
(Reuters)
Updated: 2005-12-19 07:08
Iran hopes to sign a major oilfield deal with China's Sinopec by the end of
January, Deputy Oil Minister Mohammad Hadi Nejad-Hosseinian told the oil
ministry Web site on Saturday.
If China does sign a deal, it could revive Iran's moribund oil industry that
has been stagnant for nearly four months while President Mahmoud Ahmadinejad
tussled with parliamentarians over his choices for oil minister.
But the deal could draw fire from the United States. Washington has already
penalized Chinese firms for working in Iran, which it accuses of seeking nuclear
arms and funding anti-Israeli militia. Tehran denies the charges.
Iran is looking to export liquefied natural gas (LNG) to China for some 30
years when its exports of the supercooled fuel hit world markets in 2009. The
overall value of such a contract is estimated at more than $70 billion.
In return, China would take a large upstream stake in the giant Yadavaran
oilfield in southern Iran.
Iran signed a Memorandum of Understanding on such a deal in October 2004, but
Nejad-Hosseinian said he hoped all the details of a proper contract could be
finalized by January.
"Experts will present a report on Tuesday to high-level decision-makers,"
Nejad-Hosseinian said. "A final contract could be finalized by the end of
January 2006."
He said one of the main negotiating areas would be the output expected from
Yadavaran.
"Iran estimated the production capacity at 300,000 barrels per day (bpd) but
the Chinese have pledged their readiness to extract 180,000 bpd," he said.
"Sinopec has said it could produce 300,000 bpd if well tests show that is
possible after 180,000 bpd is reached."
Other complications included the length of the concession of the oilfield and
pricing.
Signing big upstream investment deals is crucial for the world's fourth
biggest crude producer as output capacity is dropping at an alarming rate.
Previous oil minister Bijan Zanganeh said in July Iran's oilfields were
depleting by up to 400,000 bpd each year.
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