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Chinese energy giant bids farewell to $5 billion Iran project

In what could be seen as yet another blow to Iran's sanctions-hit economy, China's state oil company has withdrawn from a major multibillion-dollar deal in the country's south.
A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Gulf July 25, 2005. REUTERS/Raheb Homavandi/File Photo   - S1BEUBPCZPAB

Iran's Oil Minister Bijan Zangeneh has confirmed that US sanctions triggered the withdrawal last week of China's state oil company, China National Petroleum Corporation (CNPC), from a major development project in Iran's energy-rich south. "Conditions brought about by the sanctions created a situation in which they were no longer able and willing to continue their activities in Iran," Zangeneh declared Oct. 8 in reference to CNPC and the French energy giant Total. The latter's exodus from the same project occurred last August.

The National Iranian Oil Company signed the initial contract for the development of phase 11 of the South Pars field with Total, CNPC and the Iranian partner Petropars. The firms held 50.1%, 30% and 19.9%, respectively, of the $5 billion project. However, Total's share was taken up by CNPC after the French company failed to win a US sanctions waiver that exempts a limited number of international corporations involved in the oil business with Iran. Those sanctions the administration of US President Donald Trump reimposed on Iran after abandoning the multilateral nuclear deal in May 2018.

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