China and Iran have agreed to jointly build an oil terminal in the Persian Gulf, China�s People�s Daily Online reported.

The oil terminal will be built on�Qeshm Island in�the southern part of�the Gulf and will turn the island into�a major center for�oil production and storage.

The $550 million contract was signed by�Iran's Machine Making Co. and China's largest heavy industry enterprise.

After the completion of�the first stage of�the joint project Qeshm Island will be able to�store 10 million barrels of�light, heavy and ultra-heavy crude oil produced in�Iran's West Karoun region.

The oil terminal will be large enough to�handle tankers up�to 140 meters deep and store an estimated 30 million barrels of�crude.

In keeping with�a 10-year lease contract the terminal will generate an annual revenue of�up to $300 million.

Covering an area of�1,491 square kilometers north of�the Strait of�Hormuz, Qeshm Island is the largest in�the Persian Gulf.

Iran also plans to�set up�a financial center on�Qeshm Island as�a gateway for�foreign banks and other institutions to�enter its domestic market, Bloomberg reported on�Tuesday.

Several Chinese and Russian banks have already expressed interest in�opening offices on�the island.

By Sputnik