TEHRAN, May 19 (Xinhua) -- Iran and China have finalized the negotiations and came up with an agreement on the development of the North Pars gas field in the Gulf, local daily Tehran Times reported on Saturday.

Iran's Pars Oil and Gas Company's (POGC) and China National Offshore Oil Corp (CNOOC) will ink the contract by August 31, 2007,the daily quoted POGC managing director Akbar Torkan as saying on Friday.

CNOOC has already signed a memorandum of understanding with National Iranian Oil Co. (NIOC) on upstream and downstream development of the gas field which has been defined in four phases, the daily reported.

According to the negotiations, the phases are to produce 20 million tons of liquefied natural gas (LNG) per year, Torkan said.

The North Pars gas field is located 85 km north of the giant South Pars gas field in the Gulf and has an estimated 80 trillion cubic feet of natural gas, according to the report.