Chinese energy giant bids farewell to $5 billion Iran project

Al-Monitor – Iran’s Oil Minister Bijan Zangeneh has confirmed that US sanctions triggered the withdrawal last week of China’s state oil company, China National Petroleum Corporation (CNPC), from a major development project in Iran’s energy-rich south. “Conditions brought about by the sanctions created a situation in which they were no longer able and willing to continue their activities in Iran,” Zangeneh declared Oct. 8 in reference to CNPC and the French energy giant Total. The latter’s exodus from the same project occurred last August.

The National Iranian Oil Company signed the initial contract for the development of phase 11 of the South Pars field with Total, CNPC and the Iranian partner Petropars. The firms held 50.1%, 30% and 19.9%, respectively, of the $5 billion project. However, Total’s share was taken up by CNPC after the French company failed to win a US sanctions waiver that exempts a limited number of international corporations involved in the oil business with Iran. Those sanctions the administration of US President Donald Trump reimposed on Iran after abandoning the multilateral nuclear deal in May 2018.

Iran’s quick replacement of Total with CNPC fell within a greater economic diplomacy approach, which the Iranian leadership has described as “Look to the East,” an inclination toward boosted business with the eastern bloc, on top of which stand China and Russia. The policy has been dynamically pursued by senior Iranian officials including Foreign Minister Mohammad Javad Zarif during multiple high-level visits to Beijing.

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