TEHRAN - Iran and China have updated a 25-year deal signed first in 2016 that foresees $400 billion of Chinese investment in the resource-rich Middle Eastern nation, well-regarded energy industry publication the Petroleum Economist reports.
The update came during a visit at the end of August by Iranian Foreign Minister Mohammad Javad Zarif to Beijing where his Chinese counterpart State Councilor Wang Yi called the two countries as “comprehensive strategic partners”, Press TV has reported.
According to the Petroleum Economist, the deal represents “a potentially material shift to the global balance of the oil and gas sector” and could mark a "seismic shift in the global hydrocarbons sector” where no US dollars will be involved in commodity transaction payments.
Investment in oil, gas, petchems projects
“The central pillar of the new deal is that China will invest $280 billion, developing Iran's oil, gas and petrochemicals sectors,” said the monthly magazine which spoke to “a senior source closely connected to Iran's Petroleum Ministry” during Zarif’s visit.
This amount may be front-loaded into the first five-year period of the deal but the understanding is that further amounts will be available in every subsequent five-year period, subject to both parties' agreement, it said.
“There will be another $120 billion investment in upgrading Iran's transport and manufacturing infrastructure, which again can be front-loaded into the first five-year period and added to in each subsequent period should both parties agree,” it added.
The Petroleum Economist has been a respected energy industry publication for decades, better known for its sophisticated analysis.
Its report follows another story last month that China had “re-engaged” Iran on three key energy projects, namely Phase 11 of the supergiant South Pars gas field, West Karoun oil fields and the Jask oil export terminal.
State-owned China National Petroleum Corporation (CNPC), one of the country’s “big three” producers, holds an 80% stake in Phase 11 after French major Total’s withdrawal in August 2018 in response to US sanctions.
CNPC had since made little progress in developing the flagship project, but it has agreed to step up the pace on its development after getting a 30% discount to the global market price on potential condensate and LNG exports, the Petroleum Economist said.
China has also agreed to increase production from Iran's West Karoun oil fields—including North Azadegan, operated by CNPC, and Yadavaran, operated by fellow “big three” firm Sinopec—by an additional 500,000 barrels per day by the end of 2020