China has opened a line of credit worth $1.3 billion to finance to renovate Abadan Oil Refinery in Iran, a top official said.

"China's Export and Credit Insurance Corporation (Sinosure) has opened a $1.3-billion credit line to develop and improve Abadan Oil Refinery,” Abbas Kazemi, chief executive of National Iranian Oil Refining and Distribution Company (NIORDC) was quoted in the Iran Daily report, which cited Mehr News Agency.

The funding is part of a $3-billion deal with China Petroleum and Chemical Corporation, known as Sinopec, which has reportedly begun operations to renovate Abadan refinery, the report said.

The deal includes improving the quality of oil by-products by upgrading the refinery's production process.

"The project is aimed at cutting mazut production and raising the output of petroleum products such as gasoline and diesel that yield higher added-value," Kazemi said.

The venture is expected to be completed in four years, with mazut output to be reduced to less than 20 percent from the current level of over 40 per cent.

The NIORDC chief added that China will bankroll 85 per cent of the Abadan refinery project and the remainder will be provided by domestic financers.