US Sanctions – Chinese CNPC Replacing French TOTAL in Iran
Iran’s oil minister, Zanganeh officially announced the Total’s replacement in South Pars project by Chinese firm China National Petroleum Corporation (CNPC). This is one of the major event wherein Iran’s development work has been affected involving major multinational organization. The total was one of the first big multinational organizations which returned to Iran last year, post lifting of the US sanctions. However, the US pulling out of the nuclear agreement, imposed sanctions on Iran causing dramatic changes in the business environment.
The South Pars project had three partners earlier, with Total holding 50.1% share, CNPC holding 30% stake and remaining 19.9% ownership with Petropars, wholly owned subsidiary of National Iranian Oil Company (NIOC). Total was operator of the project in earlier conditions, however made public statements of its position many times post the US sanctions coming into play. Total in official statements had stated that it might pull out from Iran, unless it gets waiver from the US for Iran operations. Total made it clear that it cannot afford to be exposed even to the secondary sanctions which may impact the financing via American banks for its global operations.
As per the official announcement from Iran, although CNPC has officially replaced Total in the concerned project, yet the work on the project has not started as of now. The ministry stated the discussion related to the operational commencement are yet to be held and post that the work will start.
Recently the Chinese firms have been facing some setbacks in the US w.r.t. the direct and indirect investments. However, the entry into the markets such as Iran, wherein the US and allied economies are not entering, are open and ideal opportunities. The Chinese firms have seen taking benefits of such opportunities in past as well taking benefits of conditions for commercial advantage and probably political as well.
– Ankur Kalra,
Manager – Chemicals & Materials,