China has signed an agreement to buy oil and gas from Iran and to develop Iran's Yadavaran oil field, according to state media from both countries.
China is short of energy to fuel its boom
The deal was signed in Beijing by Iranian oil minister Bijan Zanganeh and Ma Kai, head of China's National Development and Reform Commission.
China, which has longstanding ties with Iran, is searching for new energy reserves to drive its booming economy.
The agreement will be carried out by Chinese oil company Sinopec.
The prospect of Beijing increasing its reliance on Iranian energy sources may spark concern in Washington, however, as the US is spearheading international efforts to curb Iran's nuclear programme.
Success may depend on China's support, as it is one of five permanent members of the United Nations Security Council.
The UN has asked Iran to suspend all uranium enrichment or face referral the Security Council, but Iran's parliament has voted in favour of a law making it obligatory for the Iranian government to pursue uranium enrichment.
China and Iran share an alliance as developing nations and visits by senior leaders are commonplace. In April, Iranian Vice-President Mohammad Setarifar co-chaired the twelfth China-Iran Co-operation Commission meeting in Beijing.
Reports differed on the scale of the energy deal, signed during a three day visit to Beijing by Mr Zanganeh late last week, though talks seem to be in their early stages.
According to China's official Xinhua news agency, the two countries signed a memorandum of understanding committing Sinopec to buy 250 million tons of liquefied natural gas from Iran over 30 years.
Iran will also export 150,000 barrels of crude per day to China after Sinopec has developed the Yadavaran field, Xinhua reported. It valued the deal at $70bn (£38bn).
Iranian news service IRNA said the memorandum granted China the right to explore and develop the Yadavaran oil field, and provided for LNG sales of 10 million tons a year.
Iran supplied roughly 13% of China's oil imports in 2003, according to official figures quoted by Xinhua.