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China’s emerging role in Iran’s petroleum sector

Despite the stumbling blocks, China’s strategic goal of securing energy resources for its future demands and Iran’s need for foreign investment will continue to pave the way for a greater Chinese role in the Iranian energy sector.
China National Petroleum Corporation (CNPC)'s Dalian Petrochemical Corp refinery is seen in Dalian, Liaoning province, China January 22, 2019. Picture taken January 22, 2019. REUTERS/Stringer ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. CHINA OUT. - RC1E5339B6F0

There is no doubt that the reimposed US sanctions on Iran will compel Tehran to shift more proactively toward deeper political and economic ties with Eastern powers. Here, China stands out not only as Iran’s largest trading partner, but also as the top buyer of Iranian oil — and hence the key player in filling the vacuum left by a withdrawal of Western companies from Iran.

At the same time, past experiences with Chinese petroleum sector companies have been disappointing for Iran’s technocrats. In fact, as recently as 2014, Tehran terminated the major Azadegan oil project with China’s CNPC due to dissatisfaction with progress made. The question is how the new circumstances in the aftermath of the US reimposition of sanctions will impact China’s role in Iran’s petroleum sector.

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