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Iran Says China Has Pulled Out Of South Pars Natural Gas Project

A view of an Iranian natural gas refinery at the South Pars gas field on the northern coast of the Persian Gulf. (file photo)

Iranian Oil Minister Bijan Zanganeh says China's national petroleum company has pulled out of a $5 billion deal to help develop Iran's giant South Pars natural gas field in the Persian Gulf.

The development, announced by Zanganeh on the ministry's SHANA website, comes amid economic pressure on both Iran and China from the United States.

It also follows a series of military confrontations in the area between Iran and the naval forces of Britain and the United States.

The China National Petroleum Corporation (CNPC) became the dominant investor in plans for the expansion of South Pars, the world’s largest gas field, after France’s Total withdrew from the project in August 2018.

Total had planned to invest $1 billion under its 2017 contract with Iran, but backed out of the project amid pressure from Washington, which has reimposed U.S. sanctions on Tehran in response to its nuclear and ballistic missile programs and is calling on other countries to stop doing business with Iran.

Latest Setback

The Chinese state firm's withdrawal from the project is the latest setback in Iran's attempt to bring a swath of new sectors of the South Pars gas field online before the end of the Iranian calendar year on March 20.

Iran shares the world's largest gas field with Qatar. The part that China had been helping Tehran develop, known as phase 11, is near a section known as the South Pars Oil Layer. It is adjacent to the areas of the offshore gas field under Qatar's control.

Iranian Oil Minister Bijan Zanganeh (file photo)
Iranian Oil Minister Bijan Zanganeh (file photo)

Zanganeh said on October 6 that the Iranian firm Petropars will "carry out the job" in place of the Chinese company. All of the shares of Petropars are owned by the Naftiran Intertrade Company (NICO), which is affiliated with the National Iranian Oil Company.

In his statement, Zanganeh said Iran wants to improve ties with all the countries of the Middle East and suggested the possibility of negotiations with Saudi Arabia on joint projects.

"We want to be friends with all regional countries. Out mutual enemy is outside the Middle East," Zanganeh said. "I have no problem meeting with Saudi Arabia's oil minister."

'Legitimate Right'

Zanganeh also vowed that Iran "will use every possible way to export" its oil.

"We will not succumb to America's pressure because exporting oil is Iran's legitimate right," Zanganeh said.

Iran's crude oil exports were cut by more than 80 percent when the United States re-imposed sanctions after President Donald Trump exited Iran's 2015 nuclear deal with world powers in 2018.

Since then, Washington has reimposed sanctions on Tehran's oil exports.

In response, Iran has gradually scaled back its commitments under the 2015 nuclear deal, under which Tehran had agreed to cut back nuclear activities in return for lifting most international sanctions.

Iran's Atomic Energy Organization (AEOI) spokesman Behrouz Kamalvandi reiterated on October 6 that Tehran will continue to reduce its compliance with commitments under the deal if European countries that signed the pact -- France, Germany, and Britain -- do not take steps to shield Iran's economy from U.S. sanctions.

With reporting by Reuters, AP,, and ISNA