Beijing second foreign interest to withdraw . . .
Chinese state-owned China National Petroleum Corp (CNPC) has withdrawn from a US$5-billion deal at Iran’s South Pars Gas Field, the world’s largest natural gas field. It is the second foreign energy giant to pull out of the project. France’s largest energy company, Total, walked away from the deal in August 2018 due to U.S sanctions against Iran. This leaves Iranian company Petropars as the project’s sole developer. Although the CNPC has not explained its decision, analysts believe it was due to mounting pressure from Washington.
China’s investment meets push-back . . .
China has been filling the trade and investment vacuum in Iran created by U.S sanctions, but it has met with push-back from Washington. Just a few weeks ago, Iran’s foreign minister, Mohammad Zarif, visited Beijing to sign a US$280-billion “strategic partnership” deal. However, as seen by its reversal on the South Pars deal, Chinese companies have been growing more cautious of engaging Iran, especially after six Chinese companies accused of transporting Iranian oil were sanctioned by the U.S Department of State in late September, including Cosco, one of the world’s largest shipping companies.
Mixed signals ahead of next round of trade talks . . .
China and the U.S are scheduled for a new round of trade talks on Thursday and Friday. Although China has claimed that the U.S.-lead sanctions are “unilateral, non-internationally binding,” the Iranian pull-out could be seen as a gesture for creating more room for future negotiations. China, however, is sending mixed signals. It seems to be keeping its Iran options open, including responding positively to Russia’s call this week to increase regional co-operation in the Persian Gulf. The bottom line: China is unlikely to give-up on Iran, as the country holds the second-largest gas and the fourth-largest crude oil reserves in the world.
- The Financial Times: Blow for Iran as Chinese oil group pulls out of flagship gas field project
- The Financial Times: US blacklists Chinese companies for shipping Iran oil
- Foreign Policy: China’s Great Game in Iran