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THE NEW YORK TIMES: China, Iran May Finalize Oil Deal in March: Report

Feb 18th, 2006
by admin.

By REUTERS
BEIJING (Reuters) – China and Iran could sign a multi-billion dollar agreement on developing a major oilfield in Iran as early as next month, the semi-official Caijing Magazine said on its Web site.
The magazine cited Mu Shuling, an executive at Sinopec Corp. (0386.HK), as saying a delegation of the National Development and Reform Commission, China's economic-planning body, could go to Iran as early as March, where the two could sign a deal on jointly developing the Yadavaran field in southern Iran.
The deal, which the magazine said could be worth as much as $100 billion in gas and oil sales and field development costs, follows a memorandum of understanding signed in October 2004. Negotiations over Iranian oil projects often drag on for years.
A spokesman at the Iranian embassy said he could not confirm the report but news of the potential deal comes as Iran is engaged in a stand-off with the West over its nuclear program.
The International Atomic Energy Agency (IAEA) voted earlier this month to report Iran's case to the U.N. Security Council, which could impose sanctions.
Under the terms of the agreement, China, which has repeatedly urged a diplomatic solution to the nuclear crisis, would agree to buy 10 million tonnes of liquefied natural gas (LNG) from Iran each year over the next 25 years in return for the right to develop the field, the magazine said.
Yadavaran has estimated reserves of about 3 billion barrels and is expected to produce about 300,000 barrels per day (bpd), about the same volume of crude that China imports from Iran.
The magazine said that under the current arrangement, Sinopec would take a 51 percent stake in the project, and India's Oil and Natural Gas Corp. (ONGC) (ONGC.BO) would own 29 percent, slightly bigger shares than had been initially agreed. The remaining 20 percent could go to the National Iranian Oil Company (NIOC), the magazine said. It said Royal Dutch Shell (RDSa.L) had also expressed interest in the remaining fifth.
The report cited Mu as saying China's initial target of starting to buy natural gas from Iran in 2009 could be over-optimistic.
“The earliest date at which it could be started is 2010. The term of that contract has already been extended to 2034,'' Mu said.
China has repeatedly urged negotiation and restraint to resolve Iran's nuclear stand-off.
“It's extremely important for the international community to uphold the consensus on resolving the Iran nuclear issue through diplomatic means and call on the related parties to maintain calm, restraint and patience,'' Chinese Foreign Ministry spokesman Qin Gang told a news briefing on Thursday.
On Wednesday, the United States threatened sanctions against Tehran for resuming uranium enrichment for nuclear fuel without resolving suspicions it secretly wants to build atomic bombs.

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