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Iran Warns China Oil Giant Over Procrastination

Source: 2/20/2014, Location: Asia

Iran Oil Minister Bijan Namdar Zanganeh says China’s oil giant, CNPCI, is facing the prospect of expropriation in a major oil field in Iran should it continue dragging feet on the development project.

“The performance of the Chinese company is not assessed as favorable and the necessary warnings for expropriation have been given to this contractor,” Zanganeh said in the presence of President Hassan Rouhani on Monday.

China National Petroleum Corporation International (CNPCI) signed a deal with the National Iranian Oil Company (NIOC) seven years ago for the development of South Azadegan oil field.

Zanganeh said no major progress has been observed in this field which Iran shares with neighboring Iraq.

Abdolreza Haji Hossein-Nejad, managing-director of the Petroleum Engineering and Development Company (PEDEC), said the Chinese company has drilled only seven out of the promised 185 wells, adding, “Production from this joint field is still standing at around 50,000 barrels per day (bpd).”

Iraq is currently recovering 175,000 bpd of oil from its sector of this field and plans to raise its output to 400,000 bpd.

Last August, NIOC replaced China National Petroleum Corporation (CNPC) with the Iranian company, Petropars Ltd. (PPL), for the development of Phase 11 of the massive offshore South Pars gas field.

CNPC initially agreed with NIOC in 2009 to develop the only South Pars phase whose fate had not been decided.

Following the implementation of Iran’s nuclear deal with world powers, oil giants from the United States and major European countries have shown willingness to operate projects in Iran.

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