Iran's government has canceled a $2.5 billion deal with a Chinese oil giant to develop a major oil field in the south of the country after the company failed to fulfill its obligations. The oil contract used to establish a long-lasting cooperation. Earlier, Iran's oil ministry had given China National Petroleum Corporation (CNPC) 90 days to meet its obligations or face expulsion from the project. When it did not happen to Iranian satisfaction officials decided to terminate the project. Surprisingly, the Chinese oil importer did not make any attempts to settle the disagreement. Managing Director of the National Iranian Oil Company (NIOC) Rokneddin Javadi said, “90-day ultimatum had been given to the Chinese company in February. However, the Chinese contractor took no action. So, it was supposed to reassess the development of the project.” CNPC did not immediately respond to requests with its comments. Experts explain silence from the Chinese side by the fact that China’s government could have changed priorities on energy channels. Thus, China has opted to develop new oil deposits in Russia’s Far East rather than the Middle East. For the reference, the state-owned CNational Petroleum Corporation signed a contract with Tehran in 2009 to develop the giant Azadegan oil field in the southwest of the OPEC member state. The project was assessed at $2.5 billion. According to experts from Gazpromneft corporation, the Russian oil field contains 150 million tons. So, this project is expected to yield almost 10,000 tons of oil daily. Interestingly, sanctions imposed by the U.S. and EU against Iran force the Middle East state to supply its oil mainly to Asian countries. China has always been the top consumer of Iranian oil in the Asian region. The sanctions were brought in as a response to launching the nuclear program by Iran as the Western community believes that Tehran has been developing nuclear weapons under the guise of researching the peaceful atom.
