China's Sinopec in talks over Iran LNG deal

China's Sinopec in talks over Iran LNG deal

Agence France-Presse, Beijing

Chinese oil giant Sinopec is in talks with Iranian firms to import at least five million tons of liquefied natural gas (LNG) annually, in what would be a multi-billion dollar deal, state media reported on Monday.

Citing Iranian Vice President Mohammad Sattarifar, the China Daily said that in return Sinopec would win the right to exploit some of Iran's richest oilfields.

Sinopec is negotiating with National Iranian Oil Gas Export Company and the National Iranian Oil Company with senior Sinopec executives set to visit Iran next month, Sattarifar said.

"All Chinese companies are welcome to market Iranian LNG," he said.

"Both China and Iran see each other as long-term partners. Iran takes China as an energy market while China can take Iran as a long-term energy supplier.

"We hope to strengthen our cooperation in exploring and developing natural oil and gas fields and oil refineries too."

Iranian Vice Oil Minister Hadi Nejadhosainaian was in Beijing last month to push through the deal, the paper said, citing sources as Iran's Beijing embassy as saying agreement should be reached this year.

The move follows state-owned oil trader Zhuhai Zhenrong Corp. last month signing a US$20 billion deal to buy 110 million tons of LNG from Iran over 25 years.

Zhuhai Zhenrong said that it had signed a "framework agreement" in March to purchase 2.5 million tons of LNG annually from Iran starting in 2008.

Analysts said that, if successful, Chinese companies would catch up with the likes of French Total and Royal/Dutch Shell as the largest investors in Iran's oil and gas industry.

Besides generating electricity, imported LNG is expected to be used to power Chinese industry, fuel local residential gas grids and run China's growing public transport fleets of compressed and liquid natural gas buses and taxis.