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State-controlled China National Petroleum Corporation (CNPC) has suspended investment in the giant South Pars gas field in Iran, following pressure from the United States and in an attempt to steer clear of U.S.-China tensions amid the ongoing trade talks, Reuters reported on Tuesday, quoting three Chinese state oil executives.
“China sees the relationship with the U.S. as paramount over anything else. As a state-owned entity CNPC will stay clear of bringing any unwanted trouble into this relationship as the U.S. China trade talks are under way,” an official familiar with CNPC’s global strategy told Reuters.
CNPC is replacing French oil and gas major Total in Iran’s multi-billion-dollar South Pars gas project, Iran’s Oil Minister Bijan Zanganeh said at the end of November.
Last year, Total became the first supermajor to return to Iran after the previous sanctions were lifted. But after the U.S. withdrawal from the Iran nuclear deal, Total said in May that it would not be in a position to continue the South Pars 11 gas project and would have to unwind all related operations before November 4, 2018. Before Total quit Iran, the French company had 50.1 percent in the project and was its operator, while CNPC owned 30 percent, and Petropars—a wholly owned subsidiary of the National Iranian Oil Company (NIOC)—held the remaining 19.9 percent.
A suspension of the CNPC investment would be a blow to Iran, which has hoped to continue the South Pars 11 project with Chinese participation instead of French investment.
According to two of Reuters’ sources, although CNPC has agreed to suspend the South Pars investment, it has managed to convince U.S. officials—with whom the Chinese company held four rounds of talks in recent months—that CNPC should continue to invest in the oil fields North Azadegan and Masjid-i-Suleiman (MIS) to recover billions of dollars spent under contracts signed years ago.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.