China near deal to develop huge Iran oilfield

Reuters: China’s Sinopec Group is near to clinching one of its biggest overseas deals, to develop Iran’s giant Yadavaran oilfield, a top Chinese industry official said on Wednesday.
By Chen Aizhu

BEIJING, Nov 29 (Reuters) – China’s Sinopec Group is near to clinching one of its biggest overseas deals, to develop Iran’s giant Yadavaran oilfield, a top Chinese industry official said on Wednesday.

Yadavaran, in southwest Iran, is expected to produce 300,000 barrels per day, about the same amount Iran now exports to China. Iran is China’s third largest oil supplier after Saudi Arabia and Angola.

“Both sides have agreed on the technical development plans. Parties also reached consensus over the reserve of Yadavaran,” the official close to the negotiations told Reuters, but declined to give a timeline for signing the pact.

Sinopec Group, China’s second-largest state-run oil and gas firm, and the National Iranian Oil Company (NIOC) would each take 50 percent of the project with an estimated reserve of 3 billion barrels, said the official.

NIOC last week was quoted by the oil ministry’s web site SHANA as saying that all the elements of the contract had been finalised and ready for signing.

The Beijing-based Chinese oil executive said some final, small issues remained, but added the Chinese side was confident they will be resolved. The official declined to elaborate.

If completed, this would be one of the largest overseas energy investments by Sinopec, parent of listed Sinopec Corp (0386.HK: Quote, Profile, Research), after its purchase of mid-sized oilfield Udmurtneft in Russia for about $3.5 billion earlier this year.

“The industry should not be surprised that a final deal is near. Companies have been in talks for nearly three years,” said the official.

The official also confirmed a Reuters report on Monday that Royal Dutch Shell Plc (RDSa.L: Quote, Profile, Research), as a technical partner of Sinopec, has an option to take a stake in the project.

Sinopec agreed in October 2004 to take the lead in developing Yadavaran and to buy 10 million tonnes of liquefied natural gas a year from Iran for 25 years, but differences over the size of field and costs were behind a previous delay.

Chinese state oil firms, keen to boost oil and gas reserves overseas to meet surging fuel demand at home, have shown less concerns over political hurdles.

Washington has already penalised Chinese firms to working in Iran, which it accuses of seeking nuclear arms and funding anti-Israeli militia. Tehran denied these charges.