Iran has finalised a deal with Chinese oil group Sinopec and a South Korean company to invest in a $1.5bn revamp of the Esfahan oil refinery, according to local media reports.

Iran is planning to increase the gasoline and diesel fuel production at the refinery, which is located in the centre of the country, Tehran Times reported.

The two Asian companies are also nearing the end of negotiations with Iran on a similar project at the Abadan refinery in the southwest. The estimated $2.6bn project will be 85 per cent funded by Sinopec if a final agreement is reached.

Reports did not reveal the name of the South Korean company.

Sanctions against Iran’s oil sector has led Western international oil companies (IOC) to abandon the Islamic Republic leaving opportunities for Chinese companies to develop new projects.