"This contract has a clear message that despite the negative atmosphere … trying to falsely imply that no one is willing to invest in Iran's energy sector, we have such contracts signed," he said at a signing ceremony in Tehran.

 

US 'deeply disappointed'

 

Officials in the US warned that the agreement would undermine international efforts to press Iran over its nuclear programme.

 

"We're deeply disappointed and disturbed at the reports [of the deal], and we'll be making this clear to the Chinese authorities," Jessica Simon, a US state department spokeswoman, told reporters in Washington on Monday.

 

"Major new deals with Iran, particularly ones like these involving investment in oil and gas, really undermine international efforts to pressure the Iranians to comply with obligations already in place under the UN Security Council resolutions," she said.

 

She did not say whether Washington would review the deal to see if it violates the US-imposed Iran Sanctions Act, which seeks to punish foreign companies that invest more than $20m annually in Iran's energy sector.

 

China has been securing energy deals around
the world to fuel its booming economy [Reuters]
Last week a US intelligence report suggested Iran had halted its nuclear weapons programme in 2003 and was "less determined" than previously thought to develop a bomb.

 

But four days later Robert Gates, the US defence secretary, insisted Iran remained dangerous, calling on allies to "intensify" pressure on Tehran over the issue.

 

Iran has the world's third largest oil reserves and second largest gas reserves in the world and had been seeking foreign partners to develop its oil fields.

 

According to Iranian estimates, the Yadavaran field holds 3.2bn barrels of recoverable crude oil and 2.7trn cubic feet of recoverable natural gas.

 

In recent years China has been snapping up energy deals around the world as it seeks to ensure supplies of fuel for its booming economy.

 

Iran is already China's third largest supplier of crude oil.

 

But Chinese investments in countries such as Iran and Sudan have proved controversial, with critics saying it undermines diplomatic efforts to tackle issues such as nuclear proliferation or the conflict in Darfur.

 

Beijing, meanwhile, has rejected US demands for new UN sanctions against Iran over its nuclear programme, saying that the standoff over Iran's alleged development of atomic weapons requires a diplomatic solution.