Top Chinese oil firm China National Peroleum Corp signed a deal to develop Irani north Azadegan oil field
The deal is unlikely to be welcomed by the United States, which is leading a drive to isolate Iran over nuclear work that Washington says is aimed at building bombs. Tehran denies this.
"The contract for the development of North Azadegan oil field was signed ... between National Iranian Oil Company and the Chinese company CNPC, in the presence of the oil minister and the Chinese ambassador," Iran's Mehr News Agency reported.
An oil ministry official confirmed the signing and added in comments to Reuters: "It is an agreement, it is final."
North Azadegan is in west Iran, close to the Iraqi border.
Several Western energy firms have put projects in Iran, the world's fourth largest oil producer, on hold or scrapped them due to U.S. and U.N. sanctions but Asian companies, particularly from energy-hungry China and India, have been pursuing deals.
"This contract has been signed in the form of the new buy-back terms," Mehr News Agency said of the deal with CNPC, which is the Chinese state-owned parent of PetroChina .
Under so-called buy-backs, companies hand over operations of fields to NIOC after development and then receive payment from oil or gas production for a few years to cover their investment.
Foreign firms regularly complain the terms have not been generous enough, and some say they lose money on the deals. But Iran said last year it had revised oil and gas development contracts to offer more incentives to foreigners.
"Based on initial agreements with the Chinese company CNPC, the contractor is committed to the implementation of the development of the field in two phases," said a fax sent to Reuters that outlined details of the deal.
It added that the "implementation of the second phase of the project rests on the submission of a comprehensive development program and its confirmation by NIOC."
Under the first phase lasting 48 months, crude output capacity would reach 75,000 barrels per day, it said. According to initial estimates, in-place oil was put at 6 billion barrels, it said.
The period for development and reimbursement would be 12 years, it said.