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In Major Blow To Iran, China Withdraws From World’s Largest Gas Field

China’s CNPC is no longer a partner in the 11 phase of development of the giant South Pars gas field in Iran, the country’s oil minister Bijan Zanganeh.

State news agency Shana quoted Zanganeh as saying, “The fate of the South Pars Phase 11 has been determined and Petropars will continue developing the project alone and by the end of the this [Iranian calendar] year (to March 20, 2020), the first jacket will be installed in the phase for a platform with 500 mcf/d of gas production capacity.”

South Pars is the world’s largest natural gas field and Iran and Qatar share it. Iran announced plans to use foreign capital to boost its gas production from South Pars after the international sanctions against it were dropped and soon enough French Total and CNPC entered the project as partners.

When talk began that the United States will reimpose sanctions on Tehran, the French supermajor had already invested $90 million in the 11th phase of South Pars. Before President Donald Trump announced the return of the sanctions, Total’s CEO Patrick Pouyanne said the company would seek to secure waivers so it can continue working on South Pars but unfortunately for it, waivers were not granted.

Following Total’s exit, CNPC remained Iran’s only partner in the project and for a while it seemed that the Chinese company will remain the largest shareholder and operator of the project. Yet then reports began surfacing that the Chinese are about to pull out of the project for fear of CNPC’s exposure to the U.S. financial system. In a way, Zanganeh’s statement is nothing but an official confirmation of old news.

Despite this confirmation, Iran seems no less determined to carry out its plans for South Pars, with state-owned Petropars as the operator. The 20-year development project envisages bringing gas production from the field to 2 billion cu ft of gas daily.

By Irina Slav for Oilprice.com

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  • Mamdouh Salameh on October 07 2019 said:
    It isn’t a blow to Iran at all since the Iranian government would be using its state-owned company ‘Petropars’ to develop the South Pars gasfield on its own. Iran couldn’t wait until US sanctions are lifted so as to secure foreign investment. The Iranian government needs to enhance its natural gas production as soon as possible for both domestic consumption and exports

    CNPC’s withdrawal from the development of the South Pars gasfield isn’t dissimilar to ExxonMobil’s withdrawal under pressure of US sanctions from a joint $3.2 billion investment with Russian oil giant oil Rosneft in a project for drilling for oil in the Kara Sea in the Arctic — a region that Rosneft estimated it could have more oil than the entire Gulf of Mexico.

    US sanctions didn’t deter Russia from Arctic drilling. Rosneft under orders from President Putin resumed its drilling in the Central-Olginskaya offshore well in the Laptev Sea and also in the Barents Sea and the Kara Sea thus emphasizing its pre-eminent role in developing the Arctic resources using home-grown technology and local financing. In so doing, Russia and President Putin demonstrated that sanctions did not succeed in putting a crimp in Russia’s oil and gas sector.

    Russia is reported to have more than $8 trillion worth of untapped oil and gas in its sector of the Arctic. ExxonMobil ended up being the loser.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • al zurzin on October 09 2019 said:
    This article is not entirely factual. CNPC has not exited. Truer to the point is to say CNPC has shelved, or moth-balled, their activities for the time being.

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