CNPC – China’s state-owned energy major has officially replaced France-owned Total in Iran’s South Pars Gas Project. Total was pressurized to leave, despite having a 50.1 per cent stake in the $4.8 billion project after the US threatened to impose sanctions on firms that do business with Tehran. This was a win-win for Beijing of course, who has always found ways to circumvent American sanctions.
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Whilst pulling out of Iran, Total said it could not afford to be exposed to any secondary sanction, including the loss of financing by American banks. It was one of the three major energy companies set to help supply state-of-the-art technology needed to tap into South Pars, the world’s largest natural gas field shared by Iran and Qatar.
Iranian Oil Minister Bijan Zanganeh said China’s CNPC has officially replaced Total in phase 11 of South Pars but it has not started work practically. Total was the first western firm to invest in Iran, following the lifting of US sanctions in 2015. But this time around, it has failed to obtain exemptions.
The first round of anti-Iranian sanctions came into effect on August 7 and the second batch came into effect on November 5.
According to the Director of the China Southwestern University’s Centre of Iranian Studies, Ji Kaiyun said Iran depends even more on China, since it is difficult to find another such market for its products, and Beijing at the same time, can still buy oil in other countries. Moreover, China attaches great importance to crude supplies from Iran, given the fact that the two countries are complementary to each other in the field of energy. US’s Iran sanctions have opened a new window of opportunities for the Chinese.
Analysts say that China will try to extract the maximum benefit from Iran. Chinese Foreign Ministry spokesman Lu Kang said “China has been carrying out open, transparent and normal business cooperation with Iran in the economic, trade and energy sectors. Such cooperation is reasonable, legitimate and lawful.” A former US diplomat said China is a vast economy and has enough middle-sized companies that don’t have a lot of exposure to the US that Iran is going to be able to continue large quantities of trade there, assuming the Chinese government lets that happen and wants that happen.
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