China National Petroleum Corp (CNPC) has signed a contract with National Iranian Oil Company (NIOC) for the development of Iran’s South Azadegan oil field.

The Chinese company will buy a 70 percent share of the whole project, according to an agreement signed Sunday, September 27, in Lausanne, Switzerland between CNPC and NIOC’s overseas investment subsidiary, Naftiran Intertrade Company (NICO) that covers a 90 percent stake in the project.

CNPC, which won a bid in January [2009] to develop the North Azadegan oil field, now holds a 70 percent share of the project with NICO holding 20 percent, and Inpex of Japan having the remaining 10 percent.

The South Azadegan project is slated to produce 260,000 barrels of crude oil per day, and its development will cost around .

5 billion dollars.

The field, along the Iraqi border, holds reserves estimated at approximately 42 billion barrels of oil, one of the world’s largest finds in the last 30 years.

Iran provides 14 percent of China’s demand for oil.

The deal is couched in buy-back terms, in which CNPC will hand over the operation of the field to NIOC after development and will receive payments from the oil production for a few years to cover its investment.

(Rigzone)