China's CNPC quits flagship Iran gas project as sanctions bite

[DUBAI] China National Petroleum Corp is no longer a partner in Iran's biggest natural gas project, and the Persian Gulf nation will develop Phase 11 of the giant South Pars field on its own, Oil Minister Bijan Namdar Zanganeh said, according to the ministry's Shana news service.

CNPC was the only international partner left in the project, after Total SA of France withdrew last year when US President Donald Trump abandoned the 2015 nuclear accord and reimposed sanctions on Iran. Phase 11 was the biggest infrastructure development project with major foreign participants that Iran arranged after the accord took effect.

The Chinese company was "dismissed" from the project, Shana reported, without giving details. Iran's Petropars will take over CNPC's stake and be sole participant in Phase 11, Mr  Zanganeh told reporters in Tehran, according to Shana.

Calls for comment to the CNPC spokesman's office in Beijing after normal business hours went unanswered.

Iran had awarded Total, CNPC and Petropars Ltd a contract in July 2017 to develop Phase 11 of South Pars, its part of the world's biggest offshore gas field. Total, which initially held a 50.1 per cent stake, pulled out in August 2018. CNPC had a 30 per cent share in the project, while Petropars held 19.9 per cent.

International energy companies have been reluctant to work in Iran since the US reimposed curbs on the country, due to their concerns that Washington might blacklist them for engaging with the Islamic Republic. China remains one of the biggest buyers of Iran crude oil, in spite of US sanctions.

Phase 11 will produce 500 million cubic feet a day of gas by March 2020, Mr Zanganeh told reporters on Sunday, suggesting that the project is ahead of schedule. It was due to start up in 2021, according to a statement Total issued when it was awarded the development contract.

CNPC's role in the project had been uncertain for several months. The company had not carried out any of its share of the work, Zanganeh said in February. It was still in negotiations to remain a partner as recently as August, according to the head of Iran's Pars Oil and Gas Co.

BLOOMBERG