China pulls out of $5bn Iran gas field deal amid 'US maximum pressure policy'

Beijing's withdrawal from the South Pars field deal, which was struck in the wake of Iran's landmark 2015 nuclear deal with world powers, follows France's Total SA's withdrawal over US sanctions.

Oil Minister Bijan Zangeneh, quoted by the ministry's SHANA news agency, said on Sunday that the China National Petroleum Corp. was "no longer in the project." He did not elaborate or give any reason for the withdrawal, though SHANA said the company "had pulled out of a contract" to develop the field.

Officials in Beijing didn't immediately acknowledge their decision. Phone calls to the CNPC rang unanswered on Sunday and its website bore no mention of the withdrawal.

However, Iranian Foreign Minister Mohammad Javad Zarif separately complained on Sunday about the US campaign against Tehran and its impact on foreign investments.

"We have been facing plenty of problems in the field of investment because of the US maximum pressure policy," Zarif told a parliamentary committee, according to the semi-official Tasnim news agency. "We are trying to remove the problems."

Sanctions squeeze

The South Pars field deal appears to be the latest casualty of Washington's campaign of sanctions against Tehran waged since it withdrew from the 2015 nuclear deal over a year ago.

Much of Iran's natural gas comes from its massive South Pars field, which it shares with Qatar. The initial plan for the development of South Pars involved building 20 wells and two wellhead platforms, a project that would have a capacity of 2 billion cubic feet of natural gas a day.

Under terms of the initial deal, Total was to have a 50.1 percent stake, with CNPC getting 30 percent and the Iranian firm Petropars getting 19.9 percent. With Total's withdrawal, CNPC had taken over the French firm's stake. Now Petropars will develop the field alone, Zangeneh said.

Total first pulled out of Iran in 2006 as United Nations sanctions first took hold over fears Iran's atomic program would be used to build nuclear weapons. Tehran has maintained its program is only for peaceful purposes. Iran cancelled another CNPC contract in 2012 amid increasing international sanctions which led to the 2015 nuclear deal.

After withdrawing from the deal, the US imposed sanctions on Iran that have kept it from selling its oil abroad and have crippled its economy.

Iran has since begun breaking terms of the nuclear deal. In late September, the US sanctioned Chinese shipping firms it said were ferrying Iranian crude oil.

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