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Iran says China seeks to invest in refinery sector

Warns to blacklist companies pulling out on sanctions.

July 23, 2010 8:10 by

China seeks to finance development of Iran’s refinery industry, an Iranian official was quoted on Thursday as saying, trying to show sanctions have not stopped foreign investment in the Islamic state’s energy sector.

“Some Chinese companies want to finance development of Iran’s refineries and also to get involved in developing our gas projects,” said deputy Oil Minister Alireza Zeighami, state television reported.

He did not specify names of the Chinese companies.

“The two countries are in talks on China’s investment in Iran’s gasoline production projects … including development of Iran’s Isfahan and Abadan refineries,” the official said.

Sanctions imposed on Iran by the United States and U.N. have forced western companies to stay away from investing in the Islamic state’s gas and oil sector.

The United States and its European allies fear Iran is trying to develop nuclear bombs under cover of a civilian programme.

Iran, the world’s fifth-largest crude oil exporter, says its nuclear programme is a peaceful bid to produce electricity and has dismissed sanctions as ineffective.

To isolate Tehran on the international stage over its nuclear ambitions, sanctions also pressure foreign banks to stop finance for business with Iran.

Iran’s Oil Minister Massoud Mirkazemi said Iran needed $25 billion of foreign investment to develop its gas and oil sector.

Iran has turned to Asian companies to get financial backing and technology it desperately needs to boost output from ageing fields, overhaul refineries and export more gas. But analysts say Asia cannot meet Iran’s demands.

Iran said last year it had signed a deal with China Petroleum and Chemical Corporation (Sinopec) to expand the Abadan refinery by 210,000 barrels per day and to build the new Hormuz refinery in southern Iran, the Oil Ministry’s website SHANA reported.

The country lacks sufficient refining capacity because of imposed sanctions on Iran since its 1979 Islamic revolution, forcing the OPEC member to import some 40 percent of its gasoline needs.

Iran’s Oil Minister Mirkazemi warned international companies that pulled back from Iran because of sanctions.

“They will no longer be able to work in Iran … they will be blacklisted,” SHANA quoted Mirkazemi as saying in early July.

To make itself less vulnerable to any measure targeting its gasoline imports, Iran plans to reform its costly subsidy system, under which energy and food subsidies would be phased out over five years, to drop domestic gasoline consumption.

(Writing by Parisa Hafezi; editing by James Jukwey)

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