Delays could end CNPC's South Pars involvement

By Zhang Junmian
0 Comment(s)Print E-mail China.org.cn, August 1, 2012
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An official from China National Petroleum Corp. (CNPC) implied that the company was forced to delay, and may have to pull out of the South Pars gas field project in Iran, due to current instability in the country, according to a report by the 21st Century Business Herald on Tuesday.

China's largest oil company China National Petroleum Corp. (CNPC) was forced to delay, and may have to pull out of the South Pars gas field project in Iran, due to instability in the country. [File Photo]

The unnamed official said: "So far, we haven't withdrawn from the South Pars project, but the situation is really complicated."

He explained: "South Pars has a gas reserve of more than 20 trillion cubic meters, much more than the reported figure. Yet all investors, including us, have to slow down, or even abandon our projects there. "

CNPC, China's largest oil producing company, has been developing Phase 11 of the South Pars gas field under a US$4.7billion contract signed with Iran's Oil Ministry in 2009. The company also agreed to buy 400 trillion tons of liquefied natural gas (LNG) per year from 2009 for a 25-30 year term. .

But like many other international oil companies who turned their focus to Iran, CNPC has become more cautious about investing in the country following a subsequent string of events which destabilized the region, including the escalation of tensions between the U.S. and Iran conflict since 2009 and the political turmoil in Egypt and Libya.

Commenting on the subsequent delay of the project, the official said: "It's rational for CNPC to make delays in investment under such circumstances. In addition, project workers' safety and poor logistics are some of the other issues to be settled, as there are still a great number of minefields left over from both the Iran-Iraq War and the Gulf War."

He continued: "It's natural for the two sides to have disputes over the project's progress when Iran demands that gas should be produced for export immediately, which is impractical."

The official claimed that CNPC has sent staff members to negotiate with the Iranian side over the issue. However, irrespective of whether or not the negotiations are successful, the current instability negates the prospect of any progress being made on the project.

Iran has accused CNPC of falling behind schedule, citing the company's reasons as "Iran's instable political environment and the improper conditions around the gas field." National Iranian Oil Company also warned CNPC last year that it would replace CNPC with domestic companies if the Chinese company continued to delay the project.

The unnamed official quoted in the 21st Century Business Herald report has not responded to a Mehr News Agency report which cited Iran's Oil Ministry as saying that the Chinese company had not even begun preliminary work such as leveling land and putting up fencing.

CNPC's predecessor,-France-based Total SA, was forced to abandon the project out of concerns over Iran's stability.

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