Chinese oil firm expelled from Iran for non-compliance with undertakings

China National Petroleum Corporation International (CNPCI) was expelled from Iran after it failed to comply with its undertakings for raising the production of Azadegan gas field. A decree expelling the CNPCI came into force on Tuesday evening by Oil Minister Bijan Namdar Zanganeh after the firm was repeatedly warned to face a prospect of expropriation for procrastination in meeting its promises in the South Azadegan gas field which the country shares with Iraq, Shana reported on Wednesday. Managing Director of the National Iranian Oil Company (NIOC) Roknoddin Javadi announced on Tuesday Iran's firm decision to expel the Chinese firm, adding Iran had repeatedly warned the CNPCI officially of expulsion. Zanganeh had in February voiced his ministry?s dissatisfaction over CNPCI?s performance in the field and gave it three months to meet its obligations regarding South Azadegan oil field or face expulsion from the project. “The performance of the Chinese company is not assessed as favorable and the necessary warnings for expropriation have been given to the contractor,” Zanganeh said. In 2008, CNPCI signed a contract worth $2.5 billion with the NIOC to develop the Yadavaran field, which Iran shares with neighboring Iraq. The Chinese company was also supposed to raise production from Yadavaran oil field from 25,000 barrels per day to 180,000 bpd and 300,000 bpd in two phases, but the field is currently producing only 26,000 bpd. Also in April, CNPCI was given three months to meet its obligations regarding South Azadegan oil field or face expulsion from the project. Iran’s production from this joint field is still standing at around 50,000 bpd, while Iraq is currently recovering 175,000 bpd of oil from the field and plans to raise its output to 400,000 bpd.