SHANGHAI, China (AP) -- China Petroleum and Chemical Corp., or Sinopec, and Iran have signed a long awaited agreement for development of the Yadavaran oilfield, the official Xinhua News Agency and Iranian reports said Monday.
Sinopec and Iranian government officials sign a $2 billion deal on Sunday in Tehran.
"The initial estimation of the project's cost is about $2 billion," Xinhua quoted Iranian Oil Minister Gholam Hossein Nozari as telling reporters at the signing ceremony in Tehran.
Zhou Baixiu, head of Sinopec's International Exploration and Production Unit, and Hossein Noqreka-Shirazi, head of international affairs for the Iranian Petroleum Ministry, signed the agreement, which completes a memorandum of understanding signed in 2004, the Iranian Republic News Agency reported.
China has been snapping up energy resources across the globe as it seeks to ensure supplies of oil and gas to fuel its booming economy. Its investments in Iran and Sudan have prompted complaints it is undermining diplomatic efforts to bring recalcitrant regimes in line.
Beijing has balked at new sanctions against Iran over its nuclear program, arguing for diplomatic solutions to the standoff. A new U.S. intelligence report that Iran stopped atomic weapons development in 2003, contrary to U.S. suspicions, may have cleared the way for Sinopec to move ahead on Yadavaran, although Washington is still arguing in favor of sanctions.
The Yadavaran deal calls for the Chinese company to invest in developing the oilfield in two phases, with the first phase to produce 85,000 barrels per day to be carried out in four years and the second phase to produce another 100,000 barrels per day to be completed in another three years, Xinhua said, citing Nozari.
Earlier reports had said the two sides were divided over Sinopec's request for a 15 percent return from the project and over the planned capacity for the project. China had argued for a target of 180,000 barrels a day to avoid excess production, according to Chinese state media reports.
The Yadavaran field is expected to have a potential output of 300,000 barrels per day of crude oil. It has 3.2 billion barrels of recoverable reserves, with recoverable gas reserves estimated at 2.7 trillion cubic feet.
Sinopec, Asia's largest refiner, has shares traded in New York, London, Hong Kong and Shanghai.
