Iran may cancel $5b gas deal on CNPC delay

Iran Materials 18 June 2011 10:01 (UTC +04:00)

Iran warned China National Petroleum Corporation (CNPC) if it doesn't fulfill its obligations on developing phase 11 of the South Pars gas field, the contract would be cancelled.

National Iranian Oil Company (NIOC) and CNPC inked a contract, worth 5 billion dollars, two years ago for producing 2 billion cubic meters per day of natural gas and 70 thousand barrels of gas condensate from phase 11 of the South Pars gas field, but the Chinese company has not yet begun the development operation of the project.

Officials of CNPC have said that they are facing financial problems to provide 5 billion dollars required investment for the project.

If CNPC delay continues, Iran will start negotiations with domestic companies for replacing CNPC in the project, NIOC has announced.

The South Pars gas field is located in the Persian Gulf on a border zone between Iran and Qatar. The field's reserves are estimated at 14 trillion cubic meters of gas and 18 billion barrels of liquefied natural gas.

Known as the world's largest gas field, South Pars holds an estimated 50.97 trillion cubic meters of gas and some 50 billion barrels of condensates.