On September 3, based on a source in Iran’s Petroleum Ministry, Petroleum Economist reported that China has expressed its intention to invest $280 billion to develop Iran’s oil, gas, and petrochemicals sectors and $120 billion to upgrade the country’s transport and manufacturing infrastructure. The investment has been characterized as demonstrating the significant enhancement of China’s and Iran’s “comprehensive strategic partnership.” The sums are reportedly built into a 25-year agreement, but with payments front-ended over the first five years. The report refers to an “agreement” that would see Chinese companies receiving the right of first refusal on any new or stalled oil and gas developments. The report also quotes the Iranian source saying that up to 5,000 Chinese security personnel may be deployed to Iran as part of this expansion in bilateral ties in order to protect Chinese assets. It was also reported that China would receive discounts on oil, gas, and petrochemical products from Iran, and a grace period on payments of up to two years.
Notably, however, in an online briefing, the spokesperson for China’s Ministry of Foreign Affairs said of the report, “I’m not familiar with the reports you mentioned, and I don’t know where you obtained this information. What I can tell you is that relations between China and Iran are friendly, and that the two countries are launching normal, mutually beneficial cooperation in every sector, within the framework of international law.”
Adding to the uncertainty surrounding the veracity of Petroleum Economist’s reporting is CNPC’s reluctant position regarding the South Pars Gas Field, the most prominent case of Chinese involvement in Iranian energy projects to-date. CNPC entered into a consortium in 2016 to develop the field alongside France’s Total and Iran’s Petropars. Total pulled out in August 2018 after failing to secure a sanctions waiver from the United States. It was reported a few months later, in December 2018, that CNPC would also pull out due to sanctions risk. In July 2019, Iranian Petroleum Minister Bijan Zanganeh said he had rejected a request from CNPC to temporarily suspend operations and would require instead that CNPC either commit to the project or exit the contract entirely. Within this context, it is possible that the Iranian official referenced may be mischaracterizing, possibly deliberately, Chinese ambitions as actual agreements or near-term intentions, but that remains to be seen.