LONDON—Tehran said Tuesday it was canceling a $2.5 billion deal with China National Petroleum Corp. for the development of a giant Iranian oil field, as privileged ties between both nations face mounting challenges.
China had stepped in after Western oil companies pulled out of Iran following a European ban on investing in the Islamic Republic.
But an interim nuclear deal between Iran and six world powers has led the Islamic Republic to be more assertive toward Beijing, which some officials say has unduly taken advantage of international sanctions.
Following repeated delays, “termination of the company’s South Azadegan oil field development project has been issued,” Iran’s oil ministry website Shana quoted Roknoddin Javadi, the managing director of the National Iranian Oil Co., as saying.
CNPC didn’t return a request for comment.
Chinese companies have filled the gaps in sectors such as development and exploitation of oil fields and auto production when Western firms left following the imposition of international sanctions on Iran. Beijing is often bartering goods and services for Iranian oil of which it has become the largest buyer.
But Iranian officials complain China is delivering substandard quality and overcharging Iran and causing projects to be delayed. Chinese officials retort that they are struggling to find finance and technologies for Iranian projects and face tough contractual terms.
The signing of an interim nuclear deal between Iran and six world powers in November has fostered Iranian hopes of rebalancing the relationship with the Chinese by bringing back their Western rivals.
The quality of work by Chinese companies is “sometimes weak”, Ali Majedi, Iran’s deputy oil minister for international affairs, said in an interview earlier this year with The Wall Street Journal. “If the embargo is lifted, they have to show how to be competitive,” he said.
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