Report: China Seeking $3bln Oil Deal with Iran Despite US Sanctions

China's state-run energy giant Sinopec offered a three-billion-dollar deal to further develop an Iranian oilfield the two countries are already working on, media reports said.

The offer made by the China Petroleum & Chemical Corp (Sinopec) is part of an existing contract to operate the Yadavaran oilfield in Southwest Iran on the Iraqi border, the Wall Street Journal reported.

It noted that Sinopec has told its Iranian counterpart, the National Iranian Oil Company (NIOC), it wants its share of the field’s production to be granted under the US waiver allocated to China.

The new deal was offered by Sinopec in late December 2018 when the US allowed China to keep purchasing as much as 360,000 barrels of Iranian oil per day, the Journal said.

If implemented, the deal offered by China would double production at Yadavaran to more than 200,000 barrels a day (bpd) within six months.

China National Petroleum Corp (CNPC) and Sinopec have invested billions of dollars in Yadavaran and North Azadegan oilfields.

Yadavaran is one of the world's biggest oilfields with reserves of 31 billion barrels of light and heavy crude oil, while North Azadegan is estimated to hold 5.7 billion barrels of reserves.

Yadavaran was launched with a production of up to 115,000 bpd and around $2 billion of investment by Sinopec in November 2016. CNPC brought online the first phase of North Azadegan with 75,000 bpd in early 2017.

The United States gave waivers to eight major clients of Iranian oil (China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey) after restoring energy sanctions in November.

China’s proposed deal comes as Italy, Greece, and Taiwan, all of which had obtained similar exemptions for importing oil from the Islamic Republic, have reportedly stopped buying Iranian oil, according to oil executives.

The Journal said the three countries made the decision after “they failed to find ways to comply with other US sanctions, including bans on shipping, insuring and banking with Iran.

However, Asian buyers of Iranian oil have overcome final hurdles to resume shipments from the country, with first cargoes set to arrive in Japan as early as this month.

According to media reports, China took 576,000 barrels per day of Iranian oil in December, while South Korea discharged 300,000 barrels, its first cargo since July.

China and India continued to import Iranian oil from November while Turkey resumed imports in December.

source: FARS News Agency