Iran Inks $2 Billion Deal With Sinopec

Iran has finally signed a deal with China Petroleum and Chemical Corp., or Sinopec (SNP), to develop its Yadavaran oilfield, Chinese and Iranian news agencies reported Monday. The signing finalizes a memorandum of understanding agreed to in 2004 concerning Yadavaran, which is believed to contain 12-18 billion barrels of oil. "If other countries who like to invest in oil and gas hesitate, they will lose opportunities," said Gholam-Hossein Nozari, Iran's oil minister. The contract will go into effect immediately. Iran possesses the second-largest oil and gas reserves in the world behind Saudi Arabia and Russia, respectively. It has had difficulty signing contracts for development of those resources, however, because of the threat of sanctions over its nuclear program. Contributing to investor reluctance is Iran's insistence that the National Iranian Oil Company be allowed to operate all facilities after they are developed. China, which is eager to secure resources to sustain its surging economy, was not deterred by either consideration. It has also inked deals with Sudan, suggesting it is not overly concerned with Western anxieties about troublesome regimes. "We are very happy to sign this contract [with Iran]," said Zhou Baixiu, head of Sinopec's international exploration and production unit. Total (TOT), Royal Dutch Shell (RDS.A) and Repsol YPF (REP) have been negotiating with Iran to develop parts of South Pars, the world's largest gas field, but Iran has threatened to cut off talks if they do not reach an agreement by June 2008.

Sources: Financial Times, AP, Reuters

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