Iran, the world's fifth largest exporter of crude oil, has invited Chinese oil giants to invest in oil refining as a participant in its a 20-year US$130-billion refining development plan for the sector, sources reported.

Last week, CNOOC Ltd<0883><CEO>, PetroChina Co Ltd<601857><0857><PTR>, China Petroleum & Chemical Corp (Sinopec)<600028><0386><SNP> and state-owned banks including China Construction Bank<601939><0939> were briefed about the plan by an Iranian oil official in Beijing.

Hossein Noghrekar Shirazi, a senior official of National Iranian Oil Co, said that the Chinese oil firms would enjoy preferential policies including a 5% discount on raw materials purchased in Iran and an eight-year tax-free policy for investments made in Iranian free trade zones.

The Abadan refinery, which will cost EUR 2.7 billion and will be put into operation in 2012, is part of the 20-year refining plan. Iran wants to upgrade its equipment and sharpen its skills in the field of crude oil refining to reduce gasoline imports.

Reportedly, Chinese oil developers have already been involved in the exploration and production of oil and natural gas in Iran, but have not yet entered Iran's refining sector.