China National Petroleum Corp (CNPC) has decided to continue investing in two major Iranian oilfields but suspend investment in the South Pars natural gas project, Reuters claimed on Wednesday.
CNPC convinced the US to continue investing in the North Azadegan and Masjid-i-Suleiman (MIS) oilfields, the news agency quoted two unidentified Chinese sources as saying.
Senior US officials reportedly met CNPC executives in Beijing, most recently in October, and pressed them against injecting fresh financing in Iran.
The Chinese company convinced the US that it needed to continue investing in the two Iranian fields to recoup the billions of dollars spent under buy-back contracts signed years ago, the sources allegedly told Reuters.
CNPC brought online the first phase of North Azadegan with 75,000 barrels per day (bpd) of output in November 2016. The field on the border with Iraq is estimated to contain 5.7 billion barrels of crude reserves.
In March, former managing director of the National Iranian Oil Company (NIOC) Ali Kardor said the second phase of North Azadegan was being considered for development under a new contract model and CNPC was interested.
Iran’s Minister of Petroleum Bijan Zangeneh said last month that CNPC had replaced Total in the multibillion-dollar South Pars gas project after the French company left Iran due to the return of US sanctions.
On Wednesday, Reuters quoted what it described as three Chinese state oil executives as saying that the Chinese company had decided to suspend the plan in response to US pressure.
“China sees the relationship with the US as paramount over anything else. As a state-owned entity CNPC will stay clear of bringing any unwanted trouble into this relationship as the US China trade talks are under way,” it quoted one of the sources as saying.
Iran, it said, had 120 days to review CNPC’s role in South Pars and decide whether to keep the Chinese firm as a dormant investor or cancel the deal.
There was no immediate reaction to the news either by Iranian or Chinese officials.
Zangeneh said last month CNPC had officially replaced Total in phase 11 of South Pars, but it had not started work practically.
“Talks should be held with CNPC to determine when it will start its operational and executive activity,” he said then.
Iran’s NIOC had awarded the project in July 2017 to a consortium comprising Total (50.1 percent), CNPC (30 percent) and Petropars (19.9 percent) through a contract worth more than $4 billion.
The French company quit the project after the Trump administration announced new sanctions against Iran in May.
The news about CNPC’s withdrawal might be upsetting but Iranian officials have pledged to stream ahead with their development plans.
They have said five new phases of the giant South Pars field will come on stream by the end of the Persian year in March 2019, adding 200,000 barrels per day to Iran’s condensate production capacity.
In the oil sector, NIOC has proposed a $6 billion package to maintain production and increase the recovery rate of oilfields.
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