China to Maintain Role in N. Azadegan, Yadavaran

China to Maintain Role in N. Azadegan, YadavaranChina to Maintain Role in N. Azadegan, Yadavaran

Chinese firms will maintain their role in the second development phase of Iran's North Azadegan and Yadavaran oilfields under the same buyback agreements they had signed to develop the two fields in the first phase.

Oil Minister Bijan Namdar Zanganeh made the statement on the sidelines of a meeting with Zhang Yuqing, deputy director of China's National Energy Administration, Shana reported.

The arrangement is likely part of a memorandum of understanding that was signed between Iran and China on Sunday to expand oil and gas ties.

The news can dampen hopes of international companies, particularly Europeans, who were seeking investment in the two sought-after projects under new, more attractive contracts that are to be unveiled this year.

"Development of the second phase of the projects (North Azadegan and Yaran) will continue based on the initial contracts with the Chinese," Zanganeh said without naming the contractors.

Major Chinese oil and gas firm Sinopec, who took on the development of Yaran Oilfield during the sanctions, resumed talks on developing the second, following Tehran's nuclear agreement with the six world powers in July 2015.

Zanganeh added that Sinopec has made considerable progress in Yadavaran, but "negotiations are still underway for North Azadegan".

The state-run China National Petroleum Corporation was handed the development of North and South Azadegan oilfields. CNPC was booted out of South Azadegan in 2014 after repeated delays in fulfilling its contractual obligations, although it has fared better in the South project.

An official said last week Sinopec and CNPC were presented with an ultimatum by the National Iranian Oil Company to fast track their operations in Iran, as the duo had failed to present technical details and a timetable to develop the second phase of the oilfields.

China gained a stronger foothold in Iran's energy projects after the forced exodus of most Europeans firms from the country due to sanctions. But working with the Chinese was a mixed bag for Iranians who saw limited options for partnership beyond Chinese contractors who occasionally failed to deliver on their promises.

------- Oil Exports

Zanganeh noted that oil exports to China have exceeded 600,000 barrels per day and there is room for more.

"The volume can rise through the projects implemented by Chinese companies," he said.

For one, an agreement worth $1.7 billion has recently been signed with China to develop Abadan Oil Refinery.

China, the world's second-largest oil consumer, has been one of the most important customers of Iranian crude before and during the sanctions.

Its imports averaged 540,000 barrels of oil per day from Iran last year, while imports in April stood at 2.91 million tons, or 707,400 barrels per day, up 10.8% from March and the highest since last May.

Zanganeh added that Chinese companies can be part of Iran's new oil projects or help boost recovery from developed fields on their own or in alliance with Europeans.

"We discussed a host of issues today, including flare gases, financing petrochemical projects and financial details," he said.