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Iran, China to boost energy ties, eye upstream, downstream investment

China and Iran on Saturday agreed to boost energy-sector ties under which Beijing will be looking into the possibility of boosting investment in Iran's downstream and upstream sectors, in addition to signing more long-term contracts on energy trade related issues.

The Islamic Republic is seeking to open its doors to the world after international sanctions over its nuclear dispute were lifted on January 16.

"We examined banking and financial issues, joint investment, long-term contracts in the energy sector...," President Hassan Rouhani said after signing the documents, state television reported.

"We discussed boosting Iran-China [economic] ties over the next 10 years up to $600 billion," Rouhani said.

The Iranian president said that the two sides would work on a "25-year comprehensive document of strategic relations." Xi, accompanied by three deputy prime ministers, six ministers and a large business delegation, was the first Chinese president to visit Iran in 14 years.

"We agreed on energy cooperation and also on expanding relations within the Silk Road economic route and the marine Silk Road in various areas like roads, industrial capacities and fast railroads," Xi was quoted as saying by state television.

"The Chinese side will provide the necessary finance," the Chinese official said.

Iranian Supreme Leader Ayatollah Ali Khamenei called the landmark 25-year agreement a "very appropriate and wise" one.

"Iran is the only independent country in the region that can be relied on in the energy area because unlike some countries in the region Iran's energy cannot be influenced by any non-Iranian element," Khamenei was quoted as saying by state television at a meeting with Xi, a veiled barb aimed at regional rival, Saudi Arabia.

MORE THAN JUST INVESTMENT

During western sanctions, China remained a major purchaser of Iranian crude and became its .

"Nobody would buy oil from us, but the Chinese did over the past few years. Nobody would give us essential goods, China did. Therefore, our trade reached $52 billion in 2013-14. Because of oil price fall in 2015, this volume shrank to $39 billion," Assadollah Asgaroladi, head of Iran-China Chamber of Commerce told state television on Saturday.

"But with the new accords and agreements, we hope to raise the trade by 20%-25% each year so that we can go to around $50 billion," Asgaroladi said, who has run the chamber for the past 17 years. He expects to see $60 billion worth of trade each year.

Asgaroladi also said he envisaged cash payments for around 50%-60% for Iran's oil. The rest would remain in Chinese banks for Iran as a deposit to buy commodities and equipment.

Chinese companies filled in for western international oil companies, who abandoned Iran's energy sector because of sanctions. The country is now opening up for investment again, and plans to launch new contracts for the oil sector this year.

"Based on the 20-30 year trade plan and the protocols signed, China will overtake Europe. China will have already started before Europe looks around and figures out what investments to make," Asgaroladi said.

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