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China And Iran Start Drilling In This Super Giant Gas Field

December 27, 2020
tags: ,

By Paul Homewood

 

From OilPrice.Com:

 

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Drilling operations of the first well of the game-changing but highly-controversial Phase 11 of Iran’s supergiant South Pars non-associated natural gas field officially began last week. Significant gas recovery from the enormous resource will commence in the second half of the next Iranian calendar year that begins on 21 March 2021. The long-stalled Phase 11 development supposedly saw the withdrawal of all Chinese involvement in October 2019. In reality, though, China is still intimately involved in its development and is looking to further scale up its activities following the inauguration of Joe Biden as U.S. President on 20 January. 

https://oilprice.com/Energy/Natural-Gas/China-And-Iran-Start-Drilling-In-This-Super-Giant-Gas-Field.html

The new field is expected to eventually produce 57 million cubic metres per day (mcm/d), about a tenth of Iran’s current output.

The article goes on to describe how China got around US sanctions on Iran, after taking over Total’s 50.1% stake in the project in 2018:

As the U.S. ramped up pressure on China in the Trade War, however – especially looking to increase sanctions on its most important technology companies, including Huawei – and with China already locked into the new supercharged 25-year deal with Iran, Beijing made a policy decision to take a lower public profile on project work on Iran’s high-profile oil and gas fields wherever possible. Top of this list was Phase 11 of South Pars, so CNPC publically withdrew from the project in October 2019, having supposedly suspended further investment in it in December 2018. In reality, though, China’s activities on Phase 11 – and elsewhere in Iran and Iraq – did not cease but merely changed appearance into a less high-profile and therefore less U.S.-sanctionable form. “It was one thing for China to quietly ignore all sanctions that the U.S. had imposed on importing Iranian oil and gas, but it was quite another thing for it to blatantly put its major state companies on the ground in Iran.

Consequently, China switched to developing Iran’s oil and gas fields – including the South Azadegan, North Yaran, and South Yaran oil fields, and the South Pars gas site – by engaging in a series of ‘contract-only’ projects, such as drilling-only, field maintenance-only, parts replacement-only, storage-only, technology-only, and so on. “Most of these are being done through seemingly smaller firms that are less well-known than the big state players that attract little or no publicity but, as all companies in China are part of the state and are legally bound to work towards what they are told to do by the Communist Party, it doesn’t make any difference to the eventual outcome,” said the Iran source.

In an earlier article last month, OilPrice.com gave more detail:

Thus specific project-by-project ‘contract-only’ mode of working has been employed by China at scale in Iran ever since it – officially at least – China National Petroleum Corporation (CNPC) withdrew from the flagship Phase 11 development of South Pars in October last year. “It was obvious to anyone who knows how China works in such situations, including in neighbouring Iraq, that it was not going to walk away from its investment either in Phase 11 or in Iran as a whole, especially as it was in the process of widening out the 25-year deal with the country,” said the Iran source. Indeed, quite aside from the massive geopolitical importance of Iran (and close ally Iraq) to China, the 25-year deal means that in exchange for at least US$400 billion from China, Chinese companies will be given the first option to bid on any new – or stalled or uncompleted – oil, gas, and petrochemicals projects in Iran. China will also be able to buy any and all oil, gas, and petrochemicals products at a minimum guaranteed discount of 12 per cent to the six-month rolling mean average price of comparable benchmark products, plus another 6 to 8 per cent of that metric for risk-adjusted compensation. Additionally, China will be able to pay in soft currencies accrued from doing business in Africa and the Former Soviet Union states and, this, given the exchange rates involved, means that China is looking at another 8 to 12 per cent discount, which means a total discount of around 32 per cent for China on all oil gas, and petrochemicals purchases.

https://oilprice.com/Energy/Natural-Gas/Irans-Mega-South-Pars-Gas-Field-Nears-Completion.html

 

In fact, China’s links with Iran go much deeper:

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Last August, Iran’s Foreign Minister, Mohammad Zarif, paid a visit to his China counterpart, Wang Li, to present a roadmap on a comprehensive 25-year China-Iran strategic partnership that built upon a previous agreement signed in 2016. Many of the key specifics of the updated agreement were not released to the public at the time but were uncovered by OilPrice.com at the time. Last week, at a meeting in Gilan province, former Iran President Mahmoud Ahmadinejad alluded to some of the secret parts of this deal in public for the first time, stating that: “It is not valid to enter into a secret agreement with foreign parties without considering the will of the Iranian nation and against the interests of the country and the nation, and the Iranian nation will not recognize it.” According to the same senior sources closely connected to Iran’s Petroleum Ministry who originally outlined the secret element of the 25-year deal, not only is the secret element of that deal going ahead but China has also added in a new military element, with enormous global security implications.

One of the secret elements of the deal signed last year is that China will invest US$280 billion in developing Iran’s oil, gas, and petrochemicals sectors. This amount will be front-loaded into the first five-year period of the new 25-year deal, and the understanding is that further amounts will be available in each subsequent five year period, provided that both parties agree. There will be another US$120 billion of investment, which again can be front-loaded into the first five-year period, for upgrading Iran’s transport and manufacturing infrastructure, and again subject to increase in each subsequent period should both parties agree. In exchange for this, to begin with, Chinese companies will be given the first option to bid on any new – or stalled or uncompleted – oil, gas, and petrochemicals projects in Iran. China will also be able to buy any and all oil, gas, and petchems products at a minimum guaranteed discount of 12 per cent to the six-month rolling mean average price of comparable benchmark products, plus another 6 to 8 per cent of that metric for risk-adjusted compensation. Additionally, China will be granted the right to delay payment for up to two years and, significantly, it will be able to pay in soft currencies that it has accrued from doing business in Africa and the Former Soviet Union states. “Given the exchange rates involved in converting these soft currencies into hard currencies that Iran can obtain from its friendly Western banks, China is looking at another 8 to 12 per cent discount, which means a total discount of around 32 per cent for China on all oil gas, and petchems purchases,” one of the Iran sources underlined.

https://oilprice.com/Energy/Energy-General/China-Inks-Military-Deal-With-Iran-Under-Secretive-25-Year-Plan.html

 

There is no way China would be investing such huge amounts in Iran’s petrochemicals sector, unless it was planning to secure supplies of oil and gas for many decades to come. Iran’s gas reserves, for instance, have an estimated life of about 100 years.

Iran is naturally delighted to take China’s money, as well as getting into bed militarily with them, something, as the report points out, that has global security implications.

The West is playing an extraordinarily dangerous game by turning a blind eye to China’s real global intentions, in the hope that they might one day start to reduce emissions of carbon dioxide. The advent of Sleepy Joe will, I am afraid to say, make matters considerably worse.

Generations to come will not look favourably on our current crop of leaders.

20 Comments
  1. December 27, 2020 11:14 am

    Basing global policies on harmless trace gases in the atmosphere is idiotic, but that’s where we are in western politics.

  2. It doesn't add up... permalink
    December 27, 2020 11:45 am

    The South Pars field is shared with Qatar,which has of course been producing LNG from it for many years. As a shared resource, it is a potential flash point if one side or he other considers that they are being robbed. Almost for sure the deals also involve military guarantees and supplies.

    Aside from Iran as a paraiah state, this does illustrated the folly of abandoning the financing of international oil and gas projects that Boris proudly announced as part of his COP bid. Here we have China securing discounted energy supply to outcompete us with its industry, while making large profits from its investment, and ensuring its political influence over client states. It will doubtless seek to influence which countries get to buy oil and gas supply other than itself. For now that is just an inconvenience for some, but if we force Western majors to shut down it would become a very different issue.

    • Duker permalink
      December 28, 2020 2:39 am

      Not quite ‘shared’ The territorial waters of Qatar have around 62% of the field. As I see it the boundary line is fairly longstanding at the mid point between the coastlines and not connected to boundary disputes with Iran and UAE or Oman.

  3. December 27, 2020 11:45 am

    Beginning to look a lot like the west has decided to commit economic suicide to facilitate and hasten china’s dream of the “asian century” and that china is willing to help.

    • saveenergy permalink
      December 27, 2020 12:47 pm

      The UK decided that in the 1980s with Margaret Thatcher & Nicholas Ridley outsourcing industry to the far east.

      • December 27, 2020 1:14 pm

        Wow. Thanks. Did not know that. I spent some time, about 6 months, in china and i got a strong sense of their anticipation of the so called “asian century”.

      • Gerry, England permalink
        December 27, 2020 2:15 pm

        They received a lot of help from the unions who as we now know had leaders working for the Soviets and other Eastern European nations.

    • Tammly permalink
      December 27, 2020 1:44 pm

      Don’t you mean ‘Iran is willing to help’?

      • December 27, 2020 1:55 pm

        Maybe I do. Iran also aspires to global power probably because, like china, they too were once a global power. The Iran you see today is what remains of the Persian Empire.

  4. Broadlands permalink
    December 27, 2020 1:36 pm

    “The West is playing an extraordinarily dangerous game by turning a blind eye to China’s real global intentions, in the hope that they might one day start to reduce emissions of carbon dioxide. The advent of Sleepy Joe will, I am afraid to say, make matters considerably worse.”

    Sleepy Joe would not have won the election had the Chinese not unleashed a biological weapon that put Trump’s roaring economy into a free fall. Their ultimate goal? Yes, it will make matters worse as BH and the Greens race to rejoin the Paris Agreement.

    • December 27, 2020 1:49 pm

      Brilliant!

    • Sheri permalink
      December 27, 2020 2:07 pm

      Agreed. The Stolen Presidency will eagerly make any deal with China since without China, Jill Biden couldn’t be First Lady. Stolen Presidency has no idea what planet he’s on, so likely it will be Obama doing the dirty work, as was always Obama’s dream of a third term and this will absolutely fullfill that wish. American politics are a banana republic, third-world dictatorship mess and the American people will soon follow that path without resistance. Stolen Presidency may shut down oil and gas here, bringing back our dependence on others, and the dictators of the world will gladly overcharge and withhold to their heart’s content.

      • Harry Passfield permalink
        December 27, 2020 3:54 pm

        If you want to read about the ‘Stolen Presidency (which it was)’ go here;
        https://www.frontpagemag.com/fpm/2020/12/yes-it-was-stolen-election-john-perazzo/

      • Duker permalink
        December 28, 2020 12:10 am

        Nearly 50 judges who had ‘stolen election’ cases in front of them ( including some appointed by Trump) have said it was a farrago of nonsense without any supporting facts. There were no suitcases of votes or rigged voting software on machines. There is no statistical proof nor amazing coincidences- Kennedy and Clinton didnt win Florida and Ohio together either-
        Even Trumps Attorney General said the election was – and quote his exact words- “no widespread election fraud’.
        You can tell by the other unrelated comments that some are living in complete fantasy world , likely since Obama was president.

      • Harry Passfield permalink
        December 28, 2020 10:03 am

        Hi Duker, I guess you never read any of these reports in detail or saw the CCTV footage of the scam (perhaps you don’t want to). Most of the cases presented were dismissed on technicalities. Me? I’ll be open minded to the fact that the charges have not been properly considered in court. When it can be shown that it’s rubbish I’ll accept it. even so, did you read the actual stats regarding the voting. easiest one: Trump is the ONLY other president to have won Florida and lost the election.
        All the best.

      • Duker permalink
        December 29, 2020 12:58 am

        No evidence wasnt a technicality. Many many judges explicitly said you cant overturn an election – the relief requested- based on a few affadavits of minor irregularities. I guess you didnt read about the case where Guiliani outside the court spoke of ‘widespread fraud’ but in front of the judge explicitly ruled out fraud claims , as that requires a much standard of evidence. It was all nonsense anyway. Another case in Michigan the claimants confused counties in Minnesota and the major claim about Antrim county where there was some strange results was because of a county error in setting up the voting machines which was corrected. Not even near the number of votes to change Michigan result
        In Georgia the claims about Dominion machines shifting election day votes was nonsense as the machines print a paper ballot for the voter to check before actually casting the vote. They were all hand recounted with a similar result. Wisconsin had a had recount in the 2 largest counties that the Trump campaign paid $3 mill, with again minor changes.

        As for Florida , look it up for Kennedy in 1960- lost both Florida and Ohio and won the presidency. Again for Clinton in 1992 lost Florida and won the election against GW Bush. These things are easy to check but like your other claims lack all reason so rebutting them makes no difference as you didnt come to your position by any rational method.
        Unbelievable that you doubled down on the Florida claim ( it was only a small state then with same 10 votes as Iowa)

      • David A permalink
        December 29, 2020 12:29 pm

        Duker needs to actually read the report about Michigan where, despite heavy Democratic resistance to transparency, 16 Dominion machines were thoroughly examined.

        https://chiefio.wordpress.com/2020/12/17/asog-dominion-report-a-review/

        https://chiefio.wordpress.com/2020/12/18/asog-dominion-report-review-part-2/

        Nope Duker, the fraud was very real and heavily targeted certain swing states…

        “Late on Election Night – November 3, 2020 — President Trump led Biden by approximately 100,000 votes in Wisconsin, 300,000 votes in Michigan, 300,000 votes in Georgia, and 700,000 votes in Pennsylvania. Then, suddenly, all four of these states suspended their vote counts, almost simultaneously. By the early-morning hours of the following day, Wisconsin had flipped in Biden’s favor, followed by Michigan soon thereafter. A few days later, Georgia and Pennsylvania followed suit as well.[12]

        President Trump received more votes than any previous incumbent seeking re-election, and he increased his 2016 vote total by 11 million — the third largest rise ever achieved by an incumbent. By contrast, President Obama had comfortably won re-election in 2012 with 3.5 million fewer votes than he had received in 2008.[13]

        Biden in 2020 won only 17% of all counties nationwide, a record low.[14]

        According to exit polls, 95% of Republicans voted for Trump. Moreover, black support for Trump grew by 50% above its 2016 level, while Biden’s black support fell well below 90%.[15]

        Trump also increased his share of the national Hispanic vote from 29% in 2016, to 35% in 2020.[16]

        Trump easily won Florida, Ohio and Iowa in 2020. Since 1852, the only presidential candidate to lose an election while winning these three states was Richard Nixon in 1960 – an outcome that was likely the result of election fraud by Democrats.[17]

        Biden’s purported victory is due entirely to the fact that he seems to have overperformed specifically in the tiny handful of Democrat-run cities that provided him with narrow leads in each of the battleground states, and nowhere else. As The American Spectator puts it: “Biden [won] Michigan, Pennsylvania, and Wisconsin because of an apparent avalanche of black votes in Detroit, Philadelphia, and Milwaukee. Biden’s ‘winning’ margin was derived almost entirely from such voters in these cities, as coincidentally his black vote spiked only in exactly the locations necessary to secure victory. He did not receive comparable levels of support among comparable demographic groups in comparable states.”[18]

        The Washington Examiner notes how strange it is that Trump could have lost the election even though “Republicans won all 27 House races [that] the Cook Political Report rated as ‘toss-ups’ in its 2020 election analysis, in addition to picking up 7 of the 36 seats the outlet rated as ‘likely Democrat’ or ‘lean Democrat.’”[19] Moreover, Democrats were unable to overturn even a single Republican seat in the House.[20] And in New Hampshire, Republicans seized control of both the state House and the state Senate, which had been firmly in Democrat hands.[21]

        In a December 6 interview with Mark Levin on Fox News, pollster and Democracy Institute founder Patrick Basham said that if Biden was indeed the winner of the presidential election, he had defied key “non-polling metrics” in a way that may be “not statistically impossible, but it’s statistically implausible.” Basham explained that there are “a dozen or more of these metrics … [that] have a 100% accuracy rate in terms of predicting the winner of the presidential election,” including “party registration trends, how the candidates did in their respective presidential primaries, the number of individual donations, [and] how much enthusiasm each candidate generated in the opinion poll.”[22] Other notable variables are the candidates’ social media followings, their broadcast and digital media ratings, the number of online searches that their names generate, the number of small donors they have, and the number of individuals who are betting on them to win.[23] “In 2016,” said Basham, “[these metrics] all indicated strongly that Donald Trump would win against most of the public polling. That was again the case in 2020. So if we are to accept that Biden won against the trend of all these non-polling metrics, it not only means that one of these metrics was inaccurate … for the first time ever, it means that each one of these metrics was wrong for the first time and at the same time as all of the others.”[24]

        Noting also that “Donald Trump improved his national performance over 2016 by almost 20%,” Basham stated: “No incumbent president has ever lost a reelection bid if he’s increased his [total] votes.”[25]

        Because so many ballots were cast in 2020 by people voting by mail for the first time, most experts, using historical patterns as a guide, predicted a higher-than-usual rate of ballots being rejected for flaws such as missing information, inaccurate information, or a failure to place ballots in secrecy envelopes.[26] But precisely the opposite occurred in the battleground states:

        In Pennsylvania, a mere 0.03% of the state’s mail-in ballots were rejected in 2020 – a rate more than 30 times lower than the 2016 rejection rate of 1%.
        In Georgia, the rejection rate in 2020 was 0.2%, more than 30 times lower than the 6.4% figure from 2016.

        On and on, plus over 1300 sworn witness statements. And yes, most cases were not even allowed to be presented.

  5. jack broughton permalink
    December 27, 2020 7:46 pm

    Some interesting political commentary about the USA and Iran, the essence of the problem is that Iran is the enemy of Saudi Arabia and Israel. It’s a pity that more people can’t travel there as its a beautiful country with lovely people: pity about the Ayatollahs though!

  6. Derek W Wood permalink
    December 28, 2020 12:12 pm

    Trump will still be US President after January 20th 2021.

  7. December 28, 2020 2:12 pm

    The climate thing and now the great reset thing may add up to sayonara to western economic dominance and the rise of the asian century.

    https://tambonthongchai.com/2020/12/09/the-great-reset/

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