The next episode of friction between Beijing and Washington could be staged in Iran, where a top Chinese energy firm, defying latest U.S. sanctions, is likely to expand its stake in a giant Iranian gas field.
Iran’s state-run news agency IRNA has reported that China National Petroleum Corporation (CNPC), the world’s third-largest oil and gas firm, has replaced Total, the French energy giant, in the South Pars 11 project. “China National Petroleum Corp (CNPC) has replaced Total of France with an 80.1% stake in the phase 11 of the South Pars (gas field),” IRNA quoted Mohammad Mostafavi, director of investment of Iran’s state oil firm NIOC, as saying.
World’s largest gas field
South Pars is the world’s single largest natural gas field, which is being developed in several phases. In 2017, Total acquired a 50.1% stake in the South Pars 11 project, following the 2015 sanctions-easing Iran nuclear deal. CNPC held a 30% stake, while the rest was allocated to Iran’s Petropars Ltd. But after its withdrawal from the Iran atomic deal in May, Washington gave foreign firms 90 to 180 days limit to scrap their businesses from Iran. It warned that non-compliance would entail “secondary sanctions”, which would bar dissenting firms from doing business in the United States.
Following the U.S. demand, Total has apparently fallen in line. Bloomberg quoted Total head Patrick Pouyanne as saying last month that, “Within the U.S. legal framework, we can’t work in Iran.” He added: “It’s impossible for a company like ours, and for most or even all global companies, even maybe the Chinese. Our partners haven’t told us yet that they will take over our stake in our project.”
Reuters had previously reported that the $1 billion deal signed last July gave the Chinese firm the option to take over Total’s stake if it left Iran. In a separate report in May, after the Trump administration walked out of the Iran nuclear deal, the agency quoted an industry source as saying that if Total winds up from the South Pars field, CNPC is prepared to step in.
Tweaking remarks made earlier to IRNA, Mohammad Mostafavi of NIOC said on Saturday that there is change in the contract to develop the South Pars 11 gas field. “The role of the members of the consortium developing this project is in accordance with the provisions of the contract, and there is still no formal change in these provisions.”
Chinese Foreign Ministry in the past has maintained that it is opposed to “unilateral sanctions” imposed by the U.S. against Iran.
“China and Iran, under the precondition of not violating their respective international obligations, have maintained normal exchanges and cooperation. This is reasonable, legitimate, legal and beyond reproach. Meanwhile, China is always opposed to unilateral sanction and long-arm jurisdiction. China’s legitimate rights and interests should be upheld. This position is firm and clear,” Chinese Foreign Ministry said earlier this month.
The first round of U.S. sanctions was implemented last week, and additional follow-up curbs are expected in November.
Mr. Trump has personally declared that those companies defying the ban will be barred from doing business in the United States. “Anyone doing business with Iran will NOT be doing business with the United States,” Mr. Trump tweeted on August 7.
