A Chinese investment firm will spend US$2 billion on building an oil refinery in the Iranian northern province of Mazandaran, the official Islamic Republic News Agency (IRNA) reported on Monday, quoting the deputy head of the province’s center for attracting foreign investment, Mousa Qasem-Pisheh.
The Chinese company has already been issued the license to build the oil refinery, Iranian media report, without specifying the name of the Chinese firm involved in the project.
Chinese and Russian firms are expected to continue to invest in Iran, and to actually benefit from the U.S. withdrawal from the Iran nuclear deal, especially after European companies are very cautious regarding projects and investments in Iran, for fear of inadvertently breaking some sanction policy as U.S. sanctions on Tehran return.
A week after the U.S. withdrew from the Iran nuclear deal, reinstating sanctions after a 180-day wind-down period, France’s Total—the first supermajor to have returned to Iran after the previous sanctions were lifted—said that would not be in a position to continue the South Pars 11 gas project and would have to unwind all related operations before November 4, 2018 “unless Total is granted a specific project waiver by the US authorities with the support of the French and European authorities. This project waiver should include protection of the Company from any secondary sanction as per US legislation.”
While Total is examining how to proceed with applying for a waiver, China’s state-owned energy group CNPC is said to be ready to take over Total’s share in the South Pars development.
In addition, it’s not clear yet if the renewed U.S. sanctions would somehow affect European buyers of Iranian crude oil, for example, with bank transactions. At the same time, initial reports and estimates out of Tehran and Beijing point that China would continue to buy Iranian oil, while Iran has asked Chinese state oil buyers to keep their oil import levels.