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Last Updated: Monday, 11 June 2007, 14:35 GMT 15:35 UK
Iran discussing Asian oil venture
Oil refinery in Iran
Developing closer ties with China may be beneficial for Iran
Iran is in discussions about a joint venture to build five crude oil refineries across Asia.

Oil minister Kazem Vaziri Hamaneh said the plants - in Indonesia, Malaysia, Singapore, China and Syria - would have a total capacity of 1.1m barrels a day.

Speaking at the Asia Oil and Gas Conference in Malaysia, Mr Hamaneh did not elaborate on the plans, but said Iran would supplying oil to the sites.

He also said Iran was in talks about storing strategic crude in China.

"Iran has finalised feasibility studies for five refining projects in five Asian countries with a total capacity of 1.1 million barrels per day," Mr Hamaneh told the conference in Kuala Lumpur.

"We are supposed to be partners in the refineries and also try to provide the crude oil for those refineries.

"The aim is to bring Asian countries together and to provide crude oil for mutual benefit," he said.

Chinese demand

China - the world's second largest oil consumer - has been building up its supplies over the last 12 months and recently filled its 33 million-barrel-capacity Zenhai facility.

The country hopes to have a stockpile of 100 million barrels of crude by the end of 2008, with oil supplied by countries such as Iran, Sudan and Angola.

Iran's oil exports to China were 11% higher in the first four months of the year than at the same time last year.

Mr Hamaneh added that with India and China expected to become the world's two major oil consumers in the next 20 years, Iran is keen to build closer ties with Asia.

Benefits

Increasing supplies to China would serve a dual purpose, experts say.

First of all, it would secure more long-term contracts for China and so prevent the country's refiners from pushing prices higher with spot-market deals.

Secondly, it would allow Iran to secure tighter economic ties with a key UN Security Council member.

Iran - the world's second-largest oil producer after Saudi Arabia - is currently under pressure amid rising tensions with the US over its nuclear development plans.

The row has driven oil prices to record levels near $71 a barrel in recent months and led to UN sanctions being imposed against the country.

However, despite crude nearing record levels in recent months, Mr Hamaneh said oil-producing cartel Opec had no plans to increase production.

He told reporters at the talks that current market supplies of oil are adequate while inventories are at high levels.


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