Reuters is reporting that Chinese state oil company CNPC has walked away from a $4.7 billion contract for the development of phase eleven of the South Pars gas field.
According to the report, CNPC has come to follow in the footsteps of predecessor Total, which left the South Pars eleven project after Tehran accused the French supermajor of delays.
Tehran signed the contract with China National Petroleum Corporation (CNPC) in 2009.
Iran’s Mehr News Agency said CNPC had pulled out its workers from Asaluyeh, the city on the shore of the Mideast Gulf close to the South Pars gas field. According to Mehr, CNPC is over three years behind project timescales and has not begun preliminary landscaping at the site.
The news follows Tehran’s initial threat to CNPC in August last year. “Ultimatums will certainly be given to the China National Petroleum Corporation (CNPC) if the delays in developing the phase 11 of South Pars continues,” Ahmad Qalebani, Head of National Iranian Oil Co.(NIOC) was quoted as saying at the time by Mehr.
Qalebani warned last year that the CNPC contract could “be ceded to powerful domestic contractors,” if CNPC did not accelerate field development works.
Iran has the second largest natural gas reserves in the world after Russia, but sanctions over its disputed nuclear programme and other factors have slowed its development as a major exporter. The difficult operating and investment environment has seen most western oil and gas companies pull out of the country.Â
The offshore South Pars field, the world’s largest reservoir of gas, contains about half of the estimated 28 trillion cubic metres of the country’s gas reserves. The estimates for the Iranian section are 500 tcf (14.2 tcm) of gas in place and around 360 tcf (10.1 tcm) of recoverable gas which stands for 36% of Iran’s total proven gas reserves and 5.6% of the worlds proven gas reserves.
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