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China-Iran deal

China to sign a $400 billion deal with Iran for a 25-year period

The investment will bolster ties between the two countries

The global tanker market could benefit from the proposed China-Iran deal, media reports said. The world’s third most powerful country will sign a deal with Iran. The deal is expected to be worth $400 billion investment in Iran over a 25-year period.

The deal comes at a time when Iranian economy is estimated by the IMF to have contracted by 6 percent in the first six months of 2020.

As a part of the deal, both the countries will invest the money to build infrastructure projects and spend on defence alongside to maintain closer ties with each other.  China will inject $280 billion in Iran’s oil, gas and petrochemical sectors over the next five years. It is reported that further capital will be available in each subsequent five-year period.

Furthermore, the capital infusion will see China investing another $120 billion to overhaul Iran’s transport and manufacturing infrastructure.  Chinese companies will be granted to take part in any of the bidding processes for future new, postponed and uncompleted projects related to oil, gas and petrochemical inside Iran.

Iran will sell China oil, gas and petrochemical products at a minimum guaranteed discount to the six-month rolling mean average price of comparable benchmark products. In addition, China will make the purchase transaction for oil and other commodities through soft currencies, with a discount of 30 percent on all oil, gas and petrochemical purchases.

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