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China sours India’s pipe dream

Tuesday 30 November 2004, by JOSY*Joseph

NEW DELHI: In what is being termed as the deal of the century, China would pay over $70 billion to Iran in massive oil and natural gas deal that could go up to $200 billion by the time it is concluded.

The deal has rewritten strategic equations in Asia and has challenged American efforts to bulldoze Iran to shed its nuclear ambition.

Sources say India is looking at the massive deal that has also subdued its proposed oil deals with Iran including the possible oil pipeline through Pakistan that is worth just $3.5 billion.

China’s oil giant Sinopec Group entered into the $70 billion deal with Iran in the last week of October, according to reports.

In the deal signed on October 28 Iran has agreed to sell Sinopec some 250 million tons of liquified natural gas over 30 years.

Iran has also agreed to sell 150,000 barrels per day of crude oil to China over 25 years at market prices after commissioning Yadavaran oil fields where China is expected to be involved in exploration and construction.

According to reports, when China and Iran conclude some other negotiations underway the worth of total oil and gas deals between the two sides could be about $200 billion.

In 2003 Iran contributed only 13 per cent of the 226 million tons of oil imported by China.

But Iran’s contribution would now shoot up with the new deal.

The size of the deal could be gauged from the fact that Iran will have to buy some 90 new special vessels, besides the 10 recently acquired, to fulfil its LNG commitments, mostly to China.

With its booming economy and unending appetite for oil, China is turning out to be a major importer of oil and gas.

It is on a signing spree with countries such as Russia to import oil, including an oil pipeline from Siberia.

The China-Iran deal is not just the mother of all financial deals but it has also redrawn the strategic map of Asia alarming the Western world.

China has clearly come out in support of Iran in the stand-off between Iran and the International Atomic Energy Agency over former’s nuclear ambitions.

China has clearly expressed its displeasure over America’s threat to drag Iran to UN Security Council for possible sanctions.

The deal is a violation of the American Iran-Libya Sanctions Act, which is supposed to penalize any company investing over $20 million in Iran’s oil and gas industry in a year.

However all that doesn’t seem to hinder China which is emerging as Iran’s largest buyer of oil and natural gas, overtaking Japan and rewriting strategic equations in Asia and rest of the world through its mammoth economic diplomacy.

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