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Sinopec to provide $6.5bn for Iran refineries

Tehran, November 25, 2009

China's Sinopec has signed a tentative deal to provide financing of $6.5 billion for the construction and development of oil refineries in Iran, Iran's semi-official Mehr News Agency reported on Wednesday.

Mehr, giving no source for what it described as an exclusive report, said the final agreement between Sinopec and National Iranian Oil Refining and Distribution Company was expected to be signed within two months.

'National Iranian Oil Refining and Distribution Company and China's Sinopec have signed a memorandum of understanding (MOU) on the provision of $6.5 billion in finance for development projects in the country's oil refineries,' Mehr said.

It said technical experts from the two companies were studying the MOU and how to implement it. 'It is expected that the formal contract will be signed in the next two months,' Mehr said. It did not give further details on the MOU.

Chinese top refiner Sinopec had earlier agreed to import 150,000-160,000 barrels per day (bpd) of Iranian crude this year, unchanged from 2008.

Mehr listed seven new oil refinery projects in Iran and said they needed a total of $23 billion in investments to build or complete them.

'By completing or building these seven new oil refineries, the country's total oil refining capacity will reach 3.2 million barrels per day from the current 1.67 million,' Mehr said.

Analysts say Iran, the world's fifth-largest crude exporter, badly needs foreign investment and technology to help develop its energy riches.

Western firms have become increasingly wary of investing in Iran, which is under UN and other sanctions because of a dispute over its nuclear energy programme. Tehran denies US claims that the programme is aimed at developing nuclear bombs.

But Iran is still drawing interest from Indian, Chinese and other Asian firms seen as less susceptible to international pressures.

China, which is among six world powers seeking to resolve the long-running nuclear row diplomatically, is the second-largest buyer of Iranian oil.

In 2007 Sinopec finalised a $2 billion pact to develop the huge Yadavaran field in Iran, whose economy has been hit by the fall in oil prices over the past year. – Reuters

Tags: Tehran | fund | sinopec | Refineries | Mehr |

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