The refinery will be constructed within the next three years aiming at producing extra gasoline which constitutes 56 percent of the refinery's output.

The refinery's capacity is estimated to be some 300,000-350,000 barrels per day. Total investment necessary for the joint project is projected to stand at some 1.5 billion dollars.

According to the MoU, Iran will own the gasoline produced at the refinery and China will export other outputs.

Iran will take the ownership of the refinery after 25 years.

Visiting Iran's Oil Minister Bijan Namdar Zanganeh and the Chairman of China's Development and Reforms Commission Ma Kai on Thursday signed a memorandum of understanding (MoU) to award the project to develop Yadavaran oil field to China's Sinopec.

Under the MoU, Sinopec has agreed in return for Yadavaran project to purchase annually 10 million tons of Iranian liquefied natural gas (LNG) over a period of 25 years.

Sinopec will be commissioned to prepare a master development plan (MDP) for Yadavaran in cooperation with "creditable" international oil corporations.

The MDP will be implemented through buy-back scheme once approved by the National Iranian Oil Company (NIOC).

Zanganeh, heading a high-ranking oil delegation, arrived here early Thursday on a three-day visit to review expansion of Iran-China oil cooperation. He participated in a one-day conference on "Iran-China Cooperation Opportunities in Energy Sector".

The oil minister also met separately with Chinese Foreign Minister Li Zhaoxing, Minister of Commerce Bo Xilai, as well as deputy prime minister and reviewed issues of mutual interest, particularly in the areas of energy, oil and gas.