Iran suspends China contract in gas field

Iran said it had suspended a contract with China's National Petroleum Corporation International (CNPCI) for development of its North Pars gas field "until further notice"."We will decide on the continuation of CNPCI activities in the North Pars gas field when they fulfill their commitments in Iran's South Pars gas field, which is Iran's first priority," Mousa Souri, the managing director of the Pars Oil and Gas Company, told MNA. The offshore South Pars field, the world's largest reservoir of gas, contains about half of the estimated 28 trillion cubic meters of the country's gas reserves. South Pars is shared by Iran and Qatar. The Iranian part is divided into 24 phases. Tehran had previously warned the CNPCI that it would be replaced by domestic companies if it did not step up work on phase 11 of the giant South Pars gas field. Iran, which sits on the world's second largest reserves of both oil and gas, is facing US sanctions over its civilian nuclear program. Iranian officials have dismissed US sanctions as inefficient, saying that they are finding Asian partners instead. A large number of Chinese, Indian and other Asian firms have negotiated or signed up to oil and gas deals with Iran. In a recent case, Iran signed gas deals worth $14 billion with Malaysia's SKS Group in December 2008, which included a contract to build an LNG plant. Following US pressures on companies to stop business with Tehran, many western companies decided to do a balancing act. They tried to maintain their presence in Iran, which is rich in oil and gas, but not getting into big deals that could endanger their interests in the US. Yet, after oil giants in the West witnessed that their absence in big deals has provided Chinese, Indian and Russian companies with excellent opportunities to sign up to an increasing number of energy projects and earn billions of dollars, they started showing increasing interest to invest or expand work in Iran.