China Pulls Out of Giant Iranian Gas Project

By Benoit Faucon

China National Petroleum Corp. has pulled out of a $5 billion natural-gas project in Iran, as sanctions force some of Tehran's last trading partners to pull back on investments in the Islamic Republic.

Iranian oil minister Bijan Zangeneh said Sunday that domestic company Petropars Co. had fully taken over a development project in the South Pars gas field after CNPC exited it.

Tehran had hoped the Chinese state-run company would replace France's Total SA, which left the project last year after the U.S. reinstated sanctions on Iran.

Iran needs the development to move forward to supply natural gas for its power stations. But CNPC officials have said the company struggled to find banking channels to transfer funds to Iran due to U.S. pressure.

Other Asian companies -- in sectors ranging from banking to autos to tech -- have pulled back from Iran in recent months after the U.S. moved to squeeze the country's oil exports and designated its paramilitary force a terrorist organization.

Those moves have inflicted more pain on Iran's struggling economy and left Tehran with less incentive to stay committed to the multinational nuclear deal that the U.S. pulled out of last year, Western diplomats say.

China has become warier of Iran amid its trade war with Washington, and since Saudi Arabia blamed Iran for an attacks on its oil facilities.

Write to Benoit Faucon at benoit.faucon@wsj.com

(END) Dow Jones Newswires

October 06, 2019 10:43 ET (14:43 GMT)

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