China's Sinopec reportedly set for 51% stake in Iran oil field

Market Watch:

China Petrochemical Corp., better known as Sinopec Group, is close to signing a deal with Iran to develop the Yadavaran oil field in the southern area of the Middle Eastern country, the Shanghai Securities News reported Friday.

Sinopec will secure a 51% stake in Yadavaran, with India's state-owned Oil and Natural Gas Corp. (500312.BY) taking a 29% interest and local Iranian companies holding the remainder, the report said.

A deal would not only grant China access to a field with estimated reserves of more than 30 billion barrels of oil, but also represent the latest alliance between Sinopec and India's ONGC. READ MORE

Last month, the two companies teamed up to buy a 50% stake in Omimex de Colombia Ltd., which has oil and gas-producing assets in the South American country and is owned by U.S.-based Omimex Resources Inc.

China and India are often seen as rivals in the race to secure energy supplies as their domestic consumption climbs, with state-owned firms bidding against each other for assets in Africa and central Asia.

However, they have recently embarked on working together, with officials from the two countries signing a framework agreement for cooperation in January.

In 2004, Iran and China signed a memorandum of understanding in which Iran would allow Sinopec Group to develop Iran's Yadavaran oil field. In exchange, China signed an agreement to buy 10 million metric tons a year of Iranian liquefied natural gas for 25 years, although it didn't say when the first deliveries would be made.

According to the report, talks have recently involved Sinopec agreeing to provide equipment and services as part of the development of Yadavaran.