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China's CNPC pulls out from $4.8 bil Iranian gas project

Tehran — China's CNPC has pulled out from Iran's $4.8 billion South Pars gas project, Iran's oil minister said on Sunday, after France's Total abandoned the deal last year amid looming US sanctions on Tehran.

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Iran's Petropars will now develop the Phase 11 of the gas project, which was signed in 2017. CNPC was supposed to take Total's 50.1% stake in the project on top of its initial 30% share.

"The phase 11 of South Pars gas field has been decided. Petropars alone will continue development of this phase," Bijan Zanganeh was quoted as saying by the ministry's Shana news service.

"Yes, it has stepped aside," Zanganeh said when asked if the Chinese company had pulled out of the project.

Total left the project last year as the US re-imposed sanctions on Iran after Washington pulled out from a nuclear deal with Tehran.

The project is aimed initially at meeting domestic gas demand, with potential for exports in later years. Production capacity is forecast at around 2 Bcf/d of gas, coming on stream in 2021. When fully operating, the scheme is also expected to deliver around 70,000 b/d of condensate.

Zanganeh said that the Iranian contractor will install the first jacket in phase 11 by March in addition to a platform with gas extraction capacity of 500 MMcf/d.

When asked why Iran had not abandoned the CNPC deal after Total's pull-out, Zanganeh said: "We wanted to attract foreign investment for this phase. In addition, the pressure boosting platform was important for us and Petropars was due to learn the job alongside these companies."

Iran shares the giant offshore South Pars gas field with Qatar, where it is called the North Field.

--Aresu Eqbali, newsdesk@spglobal.com

--Dania Saadi, dania.el.saadi@spglobal.com

--Edited by Claudia Carpenter, claudia.carpenter@spglobal.com