Iran and China have agreed on a project for development of Abadan refinery in the southwestern province of Khuzestan, Abbas Kazemi, Iran's deputy oil minister said.
The first phase of the project worth $1.2 billion will start soon, Kazemi, who heads the National Iranian Oil Refining and Distribution Company (NIORDC), said.
Under the deal the Chinese Sinopec will undertake the project aimed at improving the quality of products of the refinery, Kazemi said.
He further said that increasing gasoline and gas oil production capacity as well as decreasing the fuel oil output is the main objective of the project.
Talks have been held with China’s Central Bank for funding the project, he said, forecasting that the project will start by November.
Kazemi also said that the project will be implemented within four years.
Iran plans to decrease the share of fuel oil production from the total refining capacity which is about 27 percent at the moment.
Kazemi said in December 2015 that production of fuel oil in Iran will decrease to 10 percent of the total refining capacity by 2025.
Iran is the world's third major fuel oil producer, which indicates low performance of the country's refineries.