Iran has cancelled a $2.5bn contract with state-owned China National Petroleum Company (CNPC) to develop the Azadegan oil field in the southwest of the Middle Eastern country, according to Iran’s official IRNA news agency.

Earlier this month Iran’s Deputy Oil Minister Emad Hosseini told the Chinese company it has three months to meet its obligations on the onshore field, calling CNPC’s progress on the development “indefensible”.

CNPC has drilled seven of the contracted 185 wells on the field with production standing at 50,000 barrels a day (b/d), according to a recent report in the Tehran Times.

In 2012, CNPC backed out of the phase 11 development of Iran’s South Pars offshore gas field after the Tehran government blamed it for delays.