Iran Cancels $2.5 Billion Oil Contract with China for Non-Compliance

Iran today cancelled a $2.5 billion contract with China National Petroleum Corp. (CNPC), citing the company's failure to fulfill its contract at the giant South Azadegan field.

The first phase of the agreement, signed in 2009, was for CNPC to drill 185 wells, but state-owned company had only drilled seven wells in the past five years. The South Azadegan field is situated at the border region with Iraq. CNPC was to target production of 600,000 barrels per day at the field, which is one of the world’s biggest with reserves of about 42 billion barrels.

“Due to non-compliance by the Chinese company CNPC, the termination of the contract will be issued,” said Rokneddin Javadi, managing director of the National Iranian Oil Company. (AFP, 29 April)

Meanwhile, Iran announced that its annual oil show, the International Oil, Gas, refining and Petrochemical Exhibit, will be held on 6-9 May. Iran will highight the terms of  its new oil contract to lure Western oil giants into investing in its oil infrastructure after years of absenteeism due to sanctions. It is doubtful, however, that the companies would sign any contracts prior to a comprehensive nuclear agreement and removal of all sanctions against Iran.

File photo: Azadegan Field, Iran. (AFP)