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Sunday, November 26, 2006

Iran invites Sinopec head to sign $100 billion oil, gas deals

Nov. 26 (Bloomberg) -- Iran has invited the managing director of China Petrochemical Corp. to Tehran to sign the development contract of Iran's Yadavaran oil field as well as oil and gas purchases worth as much as $100 billion.

A deal for China's Sinopec Group, as China Petrochemical is known, to develop Yadavaran has been completed, National Iranian Oil Co. President Gholamhossein Nozari told Iran's oil ministry press agency Petroenergy Information Network yesterday.

"All elements of the contract have been finalized and it is in the final process for signing by Sinopec,'' Nozari told Petroenergy. Sinopec has been negotiating to buy a 51 percent stake in the project since an initial agreement was reached in October 2004.

Iran, under U.S. economic sanctions and at odds with the U.S. and the European Union over its nuclear program, is seeking friendlier markets. China and Russia said on Oct. 26 they would oppose a draft resolution imposing United Nations sanctions on Iran over its nuclear program as the Security Council's five permanent members held their first meeting on the text. No resolution has been passed since.

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 percent stake in the field.

If completed, the deal will allow China to buy 150,000 barrels of Iranian crude a day at market rates for 25 years as well as 250 million tons of liquefied natural gas. Under an initial agreement signed by the Sinopec Group in October 2004, China could pay Iran as much as $100 billion for the stake and the purchases of oil and gas over 25 years.

Yadavaran, with estimated reserves of 3 billion barrels, is expected to produce 300,000 barrels per day -- or about the same volume China currently imports from Iran, Petroenergy said.

Yadavaran is located in Iran's oil-rich Khuzestan province near its border with Iraq.

China Petrochemical is parent of overseas listed China Petroleum & Chemical Corp., Asia's largest refiner.
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