US Attorney General Eric Holder, second from left, tells the press of the Iranian assassination plot. (PA)
Iran has suspended talks over a strategically important contract with China to develop the North Pars field, even as it faces tougher sanctions from the United States.
On Wednesday Washington vowed to tighten sanctions on Iran following the attempted assassination of the Saudi Arabian ambassador to the US. Two men directly linked with the Iranian Revolutionary Guards (IRG) have been charged with orchestrating a $1.5 million “international murder-for-hire scheme,” US attorney-general, Eric Holder, told reporters on Tuesday. “This conspiracy was conceived, sponsored and directed from Iran and constitutes a flagrant violation of US and international law, including a convention that explicitly protects diplomats from being harmed,” Holder said.
Iran has denied any involvement in the alleged plot, with foreign ministry spokesman, Ramin Mihman-parast, calling it a “prefabricated scenario”, intended to create “disunity” in the Middle East and “help the Zionist regime to get out of its current isolation”.
Growing international hostility and heightened economic sanctions over the last few months have forced Iran to pursue increasingly isolationist policies. Iranian Oil Minister Rostam Qasemi, an IRG Brigadier General, has renewed Iran’s drive to nationalise its energy industry since stepping up to the post in August, at the expense of Iran’s few remaining allies. On Tuesday, Iran suspended a gas contract with China National Offshore Oil Company (CNOOC) and kicked Gazprom Neft out of the Azar oilfield development; a signal that relations with the Russians and the Chinese, the only UN Security Council members to veto sanctions against the Islamic Republic, may be souring.
The $16 billion contract with CNOOC over the development of the North Pars gas field in southern Iran has been “temporarily suspended” until “they [CNPC] fulfil 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, which operates both fields, told Iran’s Mehr News Agency. A CNPC spokesman declined to comment when contacted by Interfax this morning.
China’s links
Although relations may be tense, China is unlikely to “totally withdraw from Iran,” Professor Boqiang Lin, director of the China Center for Energy Economics Research at Xiamen University and former principal economist of Asian Development Bank, told Interfax on Wednesday. “China really doesn’t have much choice. It has to go to all places where there’s energy because we have a big problem, moving forward, in terms of energy security.”
The threat of a further US crackdown may not be enough to hinder investment. “I do not believe that politics is going to stop China from going somewhere. In this particular case, because China is also now fighting with the US on the currency issue, maybe that will have some impact,” Lin said.
The South Pars field, which is estimated to hold 13 trillion cubic metres of gas, is a high priority project for Iran; it needs South Pars gas to meet rising domestic power demand and for injection into its oilfields to boost flagging production. According to a statement by Souri on Monday, $15 billion will be invested annually in the project over the next four years, with the aim of bringing all phases of the field on-stream by 2015.
Without access to international debt markets, Iran is likely to be highly dependent on China for this financing. Not only does it have the cash to invest, but “China can usually offer a better price,” said Lin. “Given the heightened tensions with the US now, China is even more important to Iran.”
Conversely, as Beijing is not dependent on Iranian gas supplies in the short-term, CNPC can afford to wait for suspensions to be lifted. “With natural gas from Central Asia, we are pretty much sufficient at this point. If Russian gas comes into the picture, we are actually OK for some time in terms of natural gas supply, maybe until 2020. Iran is a long-term strategy rather than solving China’s energy security now, or even in the medium-term,” said Lin.
Beyond Asia, Tehran has few alternative partners to develop South Pars. Khatam al-Anbia, the engineering unit of the IRG, which already holds a tight control over the oil and gas industry, will probably step in to fill the gap left by the foreign players. But while Khatam al-Anbia may have some technical oil and gas expertise, it is limited, and it can’t provide the investment the country sorely needs.
Iran threatened CNPC in August that it would seize control of the South Pars Phase 11 project if it didn’t speed up development of the field (see Iran threatens to expel CNPC as South Pars development stalls, 15 August). However CNPC appears to have continued delaying any major investment in the country, perhaps for fear of disrupting plans to expand China’s North American energy investments. Siamak Adibi, senior consultant and head of Middle East gas at Facts Global Energy, told Interfax in August: “CNPC is under pressure from the US right now and they may even cancel the development of Phase 11 of South Pars. They have not even started any work on South Pars because of the political pressure from the US,” (see China buckling under US pressure to withdraw from Iran, 11 August).
Iran suspends North Pars talks with China
US Attorney General Eric Holder, second from left, tells the press of the Iranian assassination plot. (PA)
Iran has suspended talks over a strategically important contract with China to develop the North Pars field, even as it faces tougher sanctions from the United States.
On Wednesday Washington vowed to tighten sanctions on Iran following the attempted assassination of the Saudi Arabian ambassador to the US. Two men directly linked with the Iranian Revolutionary Guards (IRG) have been charged with orchestrating a $1.5 million “international murder-for-hire scheme,” US attorney-general, Eric Holder, told reporters on Tuesday. “This conspiracy was conceived, sponsored and directed from Iran and constitutes a flagrant violation of US and international law, including a convention that explicitly protects diplomats from being harmed,” Holder said.
Iran has denied any involvement in the alleged plot, with foreign ministry spokesman, Ramin Mihman-parast, calling it a “prefabricated scenario”, intended to create “disunity” in the Middle East and “help the Zionist regime to get out of its current isolation”.
Growing international hostility and heightened economic sanctions over the last few months have forced Iran to pursue increasingly isolationist policies. Iranian Oil Minister Rostam Qasemi, an IRG Brigadier General, has renewed Iran’s drive to nationalise its energy industry since stepping up to the post in August, at the expense of Iran’s few remaining allies. On Tuesday, Iran suspended a gas contract with China National Offshore Oil Company (CNOOC) and kicked Gazprom Neft out of the Azar oilfield development; a signal that relations with the Russians and the Chinese, the only UN Security Council members to veto sanctions against the Islamic Republic, may be souring.
The $16 billion contract with CNOOC over the development of the North Pars gas field in southern Iran has been “temporarily suspended” until “they [CNPC] fulfil 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, which operates both fields, told Iran’s Mehr News Agency. A CNPC spokesman declined to comment when contacted by Interfax this morning.
China’s links
Although relations may be tense, China is unlikely to “totally withdraw from Iran,” Professor Boqiang Lin, director of the China Center for Energy Economics Research at Xiamen University and former principal economist of Asian Development Bank, told Interfax on Wednesday. “China really doesn’t have much choice. It has to go to all places where there’s energy because we have a big problem, moving forward, in terms of energy security.”
The threat of a further US crackdown may not be enough to hinder investment. “I do not believe that politics is going to stop China from going somewhere. In this particular case, because China is also now fighting with the US on the currency issue, maybe that will have some impact,” Lin said.
The South Pars field, which is estimated to hold 13 trillion cubic metres of gas, is a high priority project for Iran; it needs South Pars gas to meet rising domestic power demand and for injection into its oilfields to boost flagging production. According to a statement by Souri on Monday, $15 billion will be invested annually in the project over the next four years, with the aim of bringing all phases of the field on-stream by 2015.
Without access to international debt markets, Iran is likely to be highly dependent on China for this financing. Not only does it have the cash to invest, but “China can usually offer a better price,” said Lin. “Given the heightened tensions with the US now, China is even more important to Iran.”
Conversely, as Beijing is not dependent on Iranian gas supplies in the short-term, CNPC can afford to wait for suspensions to be lifted. “With natural gas from Central Asia, we are pretty much sufficient at this point. If Russian gas comes into the picture, we are actually OK for some time in terms of natural gas supply, maybe until 2020. Iran is a long-term strategy rather than solving China’s energy security now, or even in the medium-term,” said Lin.
Beyond Asia, Tehran has few alternative partners to develop South Pars. Khatam al-Anbia, the engineering unit of the IRG, which already holds a tight control over the oil and gas industry, will probably step in to fill the gap left by the foreign players. But while Khatam al-Anbia may have some technical oil and gas expertise, it is limited, and it can’t provide the investment the country sorely needs.
Iran threatened CNPC in August that it would seize control of the South Pars Phase 11 project if it didn’t speed up development of the field (see Iran threatens to expel CNPC as South Pars development stalls, 15 August). However CNPC appears to have continued delaying any major investment in the country, perhaps for fear of disrupting plans to expand China’s North American energy investments. Siamak Adibi, senior consultant and head of Middle East gas at Facts Global Energy, told Interfax in August: “CNPC is under pressure from the US right now and they may even cancel the development of Phase 11 of South Pars. They have not even started any work on South Pars because of the political pressure from the US,” (see China buckling under US pressure to withdraw from Iran, 11 August).