Unconfirmed Report: China Planning to Invest $400B in Iran

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.