Energy ties grow as China resists Iran sanctions-sources

Tue Apr 13, 2010 11:38am EDT

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* No change in pace of Chinese investment in Iran

* China fills vacuum left by European oil firms

By Simon Webb and Chen Aizhu

DUBAI/BEIJING April 13 (Reuters) - Chinese state oil firms have maintained the pace of project development in Iran while Beijing resists any new sanctions on the energy sector designed to press Tehran to curb its nuclear programme, industry sources said on Tuesday.

China, which has close economic ties with Iran, has much to lose from any sanctions that limit new investment to develop the world's second-largest oil and gas reserves. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a factbox on Iran's crude export and fuel import customers, click on [ID:nLDE63A011] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Chinese firms have stepped into the vacuum left by western companies who have yielded to years of political pressure to steer clear as the U.S. and its allies look to isolate Iran over its nuclear programme.

Western powers suspect Iran wants to develop nuclear weapons, which Tehran denies.

"Everything is moving ahead as planned," said a source at China's National Petroleum Corporation (CNPC). "As a state energy firm, your job is to serve the state interest. You do what the government encourages you to do."

China has made clear this week that it dislikes a proposed ban on new energy investment in Iran as it joined major powers drafting a sanctions resolution against Iran for refusing to suspend its uranium enrichment programme. [ID:nTOE63C07X] [ID:nN08208811]

Iran's foreign ministry said on Tuesday it did not believe China was close to approving new U.N. sanctions. ID:nLDE63C1EJ]


Tehran has become more dependent on investment and technology from energy-hungry China over the past few years as the political dispute has dragged on and U.S. and European firms have stalled on new deals with Iran.

"The Chinese are among the last ones there with a significant presence," said Valerie Marcel, associate fellow at Chatham House.

CNPC clinched a $4.7 billion deal earlier this year to develop part of Iran's giant South Pars gas field, supplanting Total (TOTF.PA) as lead partner in the project after the French firm delayed its investment decision under political pressure.

CNPC beefed up its staff numbers in Iran late last year, even as Western firms that were still involved in Iran scaled back. It also has a $2 billion deal to develop the North Azadegan oilfield. China's Sinopec has a deal for another of Iran's largest oilfields, at Yadavaran.

Chinese investment and progress on new projects has sometimes been slow, industry sources said, but this was due to difficulties working with Iranian contractors and bureaucracy rather than politics.

"The Chinese are developing at a reasonable pace," said a senior executive at a Western oil firm. "They had a steep learning curve to go through initially, but they weren't slow due to geopolitical concerns."

For U.S. and European oil firms sanctions on new energy projects would make little difference to their approach to Iran. The U.S. banned its firms from investing there years ago.

European firms such as Italy's ENI (ENI.MI) and Norway's Statoil (STL.OL) have been finishing off projects they began years ago, and have scaled down their presence as work ends.

"Not much has changed," the Western oil firm executive said. "We will hold our position while we see what has been concretely proposed in Washington. We are on a watching brief."

In the first months of U.S. President Barack Obama's administration, energy firms stepped up contacts with Iran in the hope that relations would improve. But political turmoil after Iran's disputed presidential elections last year sent them back to their tricky holding game, whereby Europe's energy giants try to convince Tehran they are interested while playing down any progress back home.

Potential new sanctions that U.S. politicians want to impose on fuel suppliers to Iran have had more of an impact in the past year on international oil firms' trade links with Iran.

Russia's LUKOIL (LKOH.MM) was the latest to halt shipments to Iran, which depends on fuel imports to meet up to 40 percent of its gasoline demand. [ID:nLDE63606I] It follows Royal Dutch Shell (RDSa.L) and trading giants Glencore and Vitol in halting sales. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For more stories on political upheaval in Iran, click on [ID:nLDE5BD2ES] For full coverage of a nuclear summit in Washington, click on [ID:nNUCLEAR] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ (Additional reporting by Dmitry Zhdannikov in Moscow, Tom Bergin in London, Sylvia Westall in Vienna, Muriel Boselli in Paris and Stephen Jewkes in Rome; Editing by Sue Thomas)

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Comments (8)
Cru wrote:
Thanks, China… :

Apr 13, 2010 12:52pm EDT  --  Report as abuse
healnghanz wrote:
Asking China to support sanctions in China is like asking Hitler to please stop gassing Jews. We made a deal with the Devil when George Herbert Walker Bush decided to believe that Globalization was going turn China into a Democracy. No, the opposite happened and George Herbert Walker Bush knew exactly that it would happen this way. It took Communism, which was on the ropes and taking its last breath, and infused it with Capitalism, and in the process combined it with the legalized slavery of Communism. China is a capitalist dictatorship, and the powers that be in the world saw immeasurable profits; The chance to abandon the social contract it needs to survive in the west, and actually sell off its assets in America and Europe in exchange for buying investment in a more secure irresponsible environment like China. If business could, they would go right into places like North Korea and do business with Kim Jong Il, and have starving Koreans make the tic tacs, M&Ms, Bowling Balls, and clothing, etc., that we all now get virtualy 100% of from china. Now we can only beg China, who finances the debt that Ronald Reagan and George W Bush made sure the USA would have forever and never be able to repay. And why did Reagan and Bush create this debt? to make sure we could never afford the social programs we easily could have had and were going to have. They saw a social democracy emerging and every time it does, the secret assassins in the United States murder it cause its bad for business. Well I have news for you folks, business is bad for business the way its being run now. Business is now being clearly run by those folks who have ZERO attachment to the constitution of the United States which is the only thing which makes it desireable to even live in this country. Our conservative Supreme court led by Alito, Roberts, Scalia, Thomas & Kennedy have made sure that the atrocities made in the name of freedom are to be unatoned for, like the recent ruling that dropping 50 atomic bombs on the Marshall Islands during the 50s and 60s need not be accompanied by a need to compensate the people whose islands were obliterated and irradiated. And its fair to say that half of you reading this see that and say “Good, screw the Marshall Islanders”. So now when we go hat in hand asking the Chinese to please enforce sanctions on Iran and they tell us to shove it, now you know where it all comes from. It comes from conservatives pandering to these corrupt interests, selling america out, and the corrupt interests in the rest of the world, which business helped corrupt, feeding the cycle of ever more lawlessness. Conservativism is a philosophy of rigid moralism and economic athiesm. Its a Frankenstein Killer Bee combination of totalitarianism regarding personal choices, with utterly unfettered choices made by huge companies treated as Gods. And the blindness with which we have been so affected as to not be able to even see it is astonishing. We have no power anymore because unlike China, who invests heavily in repressive regimes that it identifies with, our United States does not invest heavily in emerging countries that are socially and politically closer to us much more so than China. We dont invest in Cost Rica, or any of the Latin American countries, or in Africa! And all we do is outsource anyway! Take jobs away from americans and give them away. We could be investing in the infrastructure of countries like india for their own internal consumption, and we could be investing in our own infrastructure, but our Conservatives abhor the idea of a powerful independent electorate in this nation being better educated and self determinant. In the same way that Josef Stalin murdered his educated military officers facing Hitler in favor of illiterate communist peasants that would run in hordes headlong into german artillary shells and machine guns by the millions, conservatives in this nation favor uneducated blindly believing christians who take the bible literally and wish that this country actually self destructs in order to create a pure faith based world. But we dont have to do that. You can already see what that faith based world looks like in countris like Iran and wherever Sharia Law is practiced, or in the Orthodox Jewish community. These are signs of the future of America, which is a return to the distant past. A time of crying to the heavens for god to answer us, a time of darkness and self destruction, a time of priests and kings ruling the earth, a time of profound ignorance and an abandonment of knowledge. Where america is headed, if Sarah Palin becomes president, is not unlike what happened when the Kymer Rouge took over Cambodia. The tea partiers, who are ignorant thugs, will be driving us from our homes when there is no money to pay for infrastructure, to live pure lives in christian reeducation centers- concentration camps for non believers.

Apr 13, 2010 1:44pm EDT  --  Report as abuse
mallardman wrote:
Wow, what a rant. You poor, ignorant, bitter person. Please move away from America and do yourself a favor.

Apr 13, 2010 2:23pm EDT  --  Report as abuse
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