[NYTr] China signs $2bn Iran oil deal

[All the News That Doesn't Fit]

Al Jazeera - Dec 11, 2007
http://english.aljazeera.net/NR/exeres/5423D57A-20A3-4CB7-B3CC-1DEECBA6D97C.htm

China signs $2bn Iran oil deal

One of China's biggest energy companies has signed a $2bn deal to
develop a huge oil field in Iran, defying US calls for a trade boycott
with Tehran.

Under the deal, China's biggest refiner, Sinopec, will eventually help
pump out 185,000 barrels of oil a day from the Yadavar field in
southwest Iran.

Gholam Hossein Nozari, Iran's oil minister, said the deal showed Western
efforts to isolate Tehran had failed with Iran instead "solidifying our
economic relations with China".

"This contract has a clear message that despite the negative
atmosphere . trying to falsely imply that no one is willing to invest
in Iran's energy sector, we have such contracts signed," he said at a
signing ceremony in Tehran.

US 'deeply disappointed'

Officials in the US warned that the agreement would undermine
international efforts to press Iran over its nuclear programme.

"We're deeply disappointed and disturbed at the reports [of the deal],
and we'll be making this clear to the Chinese authorities," Jessica
Simon, a US state department spokeswoman, told reporters in Washington
on Monday.

"Major new deals with Iran, particularly ones like these involving
investment in oil and gas, really undermine international efforts to
pressure the Iranians to comply with obligations already in place under
the UN Security Council resolutions," she said.

She did not say whether Washington would review the deal to see if it
violates the US-imposed Iran Sanctions Act, which seeks to punish
foreign companies that invest more than $20m annually in Iran's energy
sector. ] Last week a US intelligence report suggested Iran had halted
its nuclear weapons programme in 2003 and was "less determined" than
previously thought to develop a bomb.

But four days later Robert Gates, the US defence secretary, insisted
Iran remained dangerous, calling on allies to "intensify" pressure on
Tehran over the issue.

Iran has the world's third largest oil reserves and second largest gas
reserves in the world and had been seeking foreign partners to develop
its oil fields.

According to Iranian estimates, the Yadavaran field holds 3.2bn barrels
of recoverable crude oil and 2.7trn cubic feet of recoverable natural
gas.

In recent years China has been snapping up energy deals around the
world as it seeks to ensure supplies of fuel for its booming economy.

Iran is already China's third largest supplier of crude oil.

But Chinese investments in countries such as Iran and Sudan have proved
controversial, with critics saying it undermines diplomatic efforts to
tackle issues such as nuclear proliferation or the conflict in Darfur.

Beijing, meanwhile, has rejected US demands for new UN sanctions against
Iran over its nuclear programme, saying that the standoff over Iran's
alleged development of atomic weapons requires a diplomatic solution.