China is maintaining its position that it does not support actions against Iran that "undermine normal trade and economic cooperation." Even as the United Nations maneuvers toward a vote on expanded sanctions against Iran - which Beijing has reportedly approved - China's main offshore oil and gas company is reported to have signed a $16 billion deal to develop an Iranian gas field. VOA's Stephanie Ho reports from Beijing.

Liu Jianchao (file photo)

Chinese Foreign Ministry spokesman Liu Jianchao was asked Thursday about the reported deal, in which state-owned China National Offshore Oil Corporation, or CNOOC, would supposedly help develop Iran's North Pars gas field.

Liu, without going into specifics, confirmed the deal, but said it is strictly a commercial activity between two companies.

Liu says China is very concerned about nuclear proliferation, but believes Iran has the right to the peaceful development of nuclear energy.

The United Nations has already passed two rounds of sanctions against Tehran because of the Iranians' refusal to halt their program of enriching uranium. Tehran says it is building only peacetime nuclear energy, but there is international suspicion that the Iranians are trying to build a nuclear weapon.

At a regular briefing in Beijing Thursday, Liu urged Tehran to "actively respond" to international concerns over its nuclear program.

But the spokesman seemed to draw a distinction between the U.N. sanctions already in place or now being contemplated, and everyday business deals between companies.

He says actions to address the Iranian nuclear issue should not "undermine normal trade and economic cooperation with Iran."

The United Nations Security Council voted in 2006 to ban the sale or transfer to Iran of items linked to its nuclear research. A second vote, in 2007, banned dealings with one of Iran's state-owned banks, and a number of its officials.

The five permanent members of the Security Council:  the United States, Britain, France and Russia, along with China - have agreed to a draft text outlining a third round of sanctions, and a vote is seen likely this week or next. The latest resolution would call for more travel and financial restrictions on named Iranian individuals and companies.

Beijing apparently feels that arrangements like the reported CNOOC-North Pars deal do not fall under the restrictions in those resolutions.

In early December, Chinese oil refiner Sinopec signed an agreement to develop Iran's oil field in Yadavaran.

The U.S. State Department says Washington is looking into whether the CNOOC deal breaches U.S. law. The Chinese company has its shares listed on the New York Stock Exchange, and is therefore subject to American laws.