Iran’s National Petrochemical Company (NPC) has signed a Memorandum of Understanding (MoU) with China Petroleum and Chemical Industry Federation (CPCIF) to build a petrochemical park in Iran, according to NPC’s news agency, NIPNA.

NPC’s director in investment, Hossein Alimorad, said the MoU follows an agreement between the two countries in 2015 to bolster bilateral relations in the energy sector, particularly in the petrochemicals industry.

He added that, based on the MoU, NPC and China’s National Development Reform Commission (NDRC) will work to enhance petrochemical relations between the two countries and the project will be constructed after “precise considerations” by both sides.

NPC will provide the land for the park’s construction by Chinese companies, Alimorad said. Reports in Iranian media said the park will be developed in Chabahar port city in Iran’s southeastern province of Sistan-Baluchestan.

The deal was also touted by local media as being part of a scheme to settle Beijing’s old oil-related debts to Tehran. A report in Iranian newspaper Sharq said the country had at least $18 billion still blocked in China in what was said to be a consequence of complications related to previous sales of oil to China during the years of sanctions.