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CNPC Deals a Blow to Iran

CNPC Deals a Blow to Iran

Thursday, 13 December, 2018 - 06:15
Workers lay pipelines for China National Petroleum Corp (CNPC)'s Shaanxi-Beijing natural gas pipeline network, ahead of Beijing's winter heating season, in Xianghe, Hebei province, China November 11, 2018. Su Dan/CNS via REUTERS
London - Asharq Al-Awsat
China National Petroleum Corp (CNPC) has suspended investment in Iran’s South Pars natural gas project in response to US pressure and to minimize tensions amid trade talks between Beijing and Washington, three Chinese state oil executives said.

South Pars is the world’s largest gas field and CNPC’s investment freeze is a blow to Tehran’s efforts to maintain financing for energy projects amid the re-imposition US sanctions on its energy sector earlier this year.

Iran said on Nov. 25 that CNPC replaced Total as the operator of Phase 11 project at South Pars after the French company ended its participation rather than violate the sanctions.

The investment halt followed four rounds of talks in Beijing, including one as recently as October, with senior US officials who urged CNPC to refrain from injecting fresh financing in Iran, one of the sources, an executive with direct knowledge of the matter, told Reuters.

It was not clear if the Chinese government gave direct orders for the halt, but the sources said it is politically sensible amid the trade negotiations between China and the United States.

“China sees the relationship with the US as paramount over anything else. As a state-owned entity CNPC will stay clear of bringing any unwanted trouble into this relationship as the US China trade talks are under way,” said a second source, an official familiar with CNPC’s global strategy.

The first source said that Iran has 120 days to review CNPC’s role in South Pars and decide whether to keep the Chinese firm as a dormant investor or cancel the deal.

CNPC did not respond to three requests for comment.

Meanwhile, Iran's Supreme leader Ali Khamenei urged Iranians on Wednesday to stay united, saying the United States would exploit divisions and was likely to launch plots against Iran in 2019.

"Everyone should be vigilant, because our enemy America is sly and evil ... and may have plans for 2019," Khamenei said in a speech, the text of which was posted on his website. "But we are stronger than them and they will fail as they have in the past."

The rial currency has lost about 60 percent of its value in 2018, as Iranians have increasingly sought dollars and gold coins to protect their savings.

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