According to the Chinese, the agreement involves the supply of 110 million tonnes of LNG over a 25-year period, starting in 2008 when the first NIOC LNG train is due to come on stream. The second train will come on stream in 2013. Each train will have capacity of about 2.5 million tonnes a year (t/y). The deal would appear to make less likely the involvement in the project of the UK's BG, which is still involved in detailed negotiations with NIGEC for an LNG sales purchase agreement.

An engineering, procurement and construction (EPC) tender for the plant has been issued, with bids due in late July. Prospective bidders include: Japan's Chiyoda Corporation; JGC Corporation, also of Japan, with Paris-based Technip; and a team of South Korea's Hyundai Engineering & Construction with Germany's Lindeand Italy's Snamprogetti. The JGC/Technip team carried out the front-end engineering and design (FEED) for the project.

A second LNG project, known as Pars LNG, is being promoted by a team of France's Total, Malaysia's Petronasand NIGEC. A shareholders' agreement was signed in February for the scheme, which is expected to start basic engineering later this year. Pars LNG is also expected to market its LNG in the Far East.

The Zhuhai Zhenrong deal is evidence of heightened Chinese interest in the Iranian energy sector, which is the People's Republic's second-biggest oil supplier. Some Chinese press reports say that under the terms of the deal Zhuhai Zhenrong will win access to upstream oil and gas assets in the Islamic republic.

Sinopec, one of the world's largest oil companies, hopes to set up an office in Tehran in the second quarter.