State-owned China National Petroleum Corporation (CNPC) has reportedly stalled its investment in Iran’s South Pars gas field development following pressure from the US and in an attempt to avoid US-China tensions amid the ongoing trade talks, according to a report by Reuters.
“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 underway,” an official familiar with CNPC’s global strategy told Reuters.
CNPC replaced French energy major Total in phase 11 of the South Pars gas project (SP11), estimated to be worth close to $5bn, in August this year.
Total pulled out of the project in the wake of US energy-related sanctions on Iran, which took effect on 4 November.
Before Total withdrew from Iran, the French firm was the operator of SP11 with a 50.1 per cent stake in the project, while CNPC owned 30 per cent and Iran’s Petropars held the remaining 19.9 per cent.
With CNPC taking over Total’s stake, its share in the project became 80.1 per cent.
A suspension of the CNPC investment would be a blow to Iran, which has hoped to continue the South Pars 11 project with Chinese participation instead of French investment.
According to Reuters, although CNPC has agreed to suspend the South Pars investment, it has managed to convince US officials – with which the Chinese company has held four rounds of talks in recent months– that it will continue to invest in the Iranian oil fields of North Azadegan and Masjid-i-Suleiman, to recover billions of dollars spent under contracts signed several years ago.
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