Iran Absorbs Another $20 Billion

A 20 billion dollar deal to buy more than 110 million tons of liquefied natural gas (LNG) from Iran over 25 years was agreed to by China's state-owned oil trader Zhuhai Zhenrong Corp.

Zhuhai Zhenrong said in a company statement that it signed a "framework agreement" earlier this month to purchase 2.5 million tons of LNG annually from Iran starting in 2008.

According to the framework agreement signed on March 3 with the Iranian State Natural Gas Import and Export Company, this will increase to five million tons annually in 2013, the statement said.

The deal was estimated to be worth 20 billion dollars and could be the largest LNG purchase agreement in the world, the China Daily said.

As part of the deal, Zhuhai Zhenrong may be allowed to buy stakes in Iranian oil and gas fields. It has signed a memorandum of understanding with Iran's Ministry of Petroleum to undertake development and production at three Iranian oilfields, the newspaper said.

Iran is the second largest oil exporter to China after Saudi Arabia.

Zhuhai Zhenrong said Iran has invited companies to construct the LNG production facilities, which are expected to be operational by 2008.