China Firm Close to Signing $3.6 Billion Deal for Iranian Gas Field Investment

China Firm Close to Signing $3.6 Billion Deal for Iranian Gas Field Investment

January 15, 2007 Filed Under: Mining Services, Oil and Gas  

A second Chinese oil company is close to signing a memorandum of understanding to invest $3.6 billion in an Iranian gas field amid U.S. pressure for Beijing to scrap another similar deal, a news report said Friday.

State-owned China National Petroleum Corp. would invest in Iran’s South Pars gas field under the agreement, Dow Jones Newswires said, citing an unidentified Chinese official.

An employee who answered the phone at CNPC’s press office in Beijing and refused to give his name said he could not confirm the report.

Washington is pressing Beijing to reconsider a deal by a state-owned oil company to invest in another Iranian gas field, citing efforts to sanction Tehran over its nuclear program. That deal calls for China National Offshore Oil Co. to invest $16 billion in the Northern Pars gas field.

A Chinese Foreign Ministry spokesman this week said Beijing considers such commercial ties with Iran to be legitimate and urged Washington not to interfere.

The controversy highlights the conflict between Beijing’s campaign to secure energy supplies for its booming economy and the foreign policy goals of the United States and other diplomatic partners.

Chinese President Hu Jintao last week told Iran’s nuclear envoy that Tehran should respond to U.N. concerns about its nuclear program but also called for a negotiated settlement of the dispute.

China has invested billions of dollars to secure access to oil and gas sources in areas as farflung as Latin America and Africa, doing business with governments such as Sudan that are isolated internationally.

CNPC is China’s biggest oil company by assets.

Its memorandum of understanding with Iran’s oil ministry would involve a pledge to spend $1.8 billion on exploration and production in the South Pars field and a similar sum on building a liquefied natural gas plant, Dow Jones reported.

The field has estimated reserves of 13 trillion cubic feet of natural gas, Dow Jones said.

CNPC is in talks with Norwegian oil company Statoil ASA about joining the project, the report said, citing another CNPC official, who also was not identified.

China’s No. 2 oil company, Sinopec Group, is in talks with Iran on a 25-year gas contract and development of Iran’s Yadavaran oilfield.

Share this post