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Checkpoint Asia

Iran Won’t Let China’s Petroleum Giant Off The Hook Easy

'No can do' says Iran to CNPC's request to suspend work on an Iranian mega gas field due to sanctions

Start developing it, or return shares to Iran — sounds fair

Iran has denied China National Petroleum Corporation (CNPC) a request to suspend work on Phase 11 of the South Pars gas project, aiming for a clear-cut solution to the Chinese role in the huge gas field, Iranian Oil Minister Bijan Zanganeh said over the weekend.

“We have to sort out the issue with this country (China), it has to either pull out of the contract, which if so, its share would be transferred to Iran’s Petro Pars,” Iranian media quoted Zanganeh as saying about CNPC’s 80-percent stake in the South Pars Phase 11 development project.

At the end of last year, Zanganeh said that CNPC had replaced French oil and gas major Total in Iran’s multi-billion-dollar South Pars gas project.

In 2017, Total had become the first supermajor to return to Iran after the previous sanctions were lifted, with the South Pars 11 gas development project.

But after the U.S. withdrawal from the Iran nuclear deal, Total said in May last year that it would not be in a position to continue the South Pars 11 project and would have to unwind all related operations before November 4, 2018. Before Total quit Iran, the French company had 50.1 percent in the project and was its operator, while CNPC owned 30 percent, and Petropars—a wholly owned subsidiary of the National Iranian Oil Company (NIOC)—held the remaining 19.9 percent.

Earlier this year, a month before the U.S. tightened the screws on Iran’s oil industry by removing all waivers for all Iranian oil buyers, Iran officially launched four new development phases at the South Pars field, which will add 110 million cubic meters to its daily output.

Zanganeh told Iranian state TV on Sunday that he hoped Iran and China would reach a friendly solution to the Chinese work on the South Pars project.

“China is a friend of Iran and the latter would not opt for severing ties for foot-dragging in projects. We are seeking alternative solutions,” Iran’s Press-TV quoted Zanganeh as saying.

Referring to Iran’s oil sales, the minister struck a defiant tone, saying that “we are doing our best to defeat the enemies and overcome the current problems in oil sale.”

At the end of last month, an analysis by TankerTrackers showed that Iran had delivered the first crude oil to a Chinese refinery complex since the U.S. removed the waivers, in a first independent tanker-tracking confirmation that China is defying the U.S. sanctions on Iran’s oil exports.

Source: OilPrice.com