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China and Iran flesh out strategic partnership

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Staggered 25-year deal could mark seismic shift in the global hydrocarbons sector


Iran's foreign minister Mohammad Zarif paid a visit to his Chinese counterpart Wang Li at the end of August to present a road map for the China-Iran comprehensive strategic partnership, signed in 2016.

The updated agreement echoes many of the points contained in previous China-Iran accords, and already in the public domain. However, many of the key specifics of this new understanding will not be released to the public, despite representing a potentially material shift to the global balance of the oil and gas sector, according to a senior source closely connected to Iran's petroleum ministry who spoke exclusively to Petroleum Economist in late August.

The central pillar of the new deal is that China will invest $280bn developing Iran's oil, gas and petrochemicals sectors. This amount may be front-loaded into the first five-year period of the deal but the understanding is that further amounts will be available in every subsequent five-year period, subject to both parties' agreement.

There will be another $120bn investment in upgrading Iran's transport and manufacturing infrastructure, which again can be front-loaded into the first five-year period and added to in each subsequent period should both parties agree.

Chinese presence
Among other benefits, Chinese companies will be given the first refusal to bid on any new, stalled or uncompleted oil and gasfield developments. Chinese firms will also have first refusal on opportunities to become involved with any and all petchems projects in Iran, including the provision of technology, systems, process ingredients and personnel required to complete such projects.

"This will include up to 5,000 Chinese security personnel on the ground in Iran to protect Chinese projects, and there will be additional personnel and material available to protect the eventual transit of oil, gas and petchems supply from Iran to China, where necessary, including through the Persian Gulf," says the Iranian source.

$280bn — Chinese investment in Iranian oil, gas and petchems sector
"China will also be able to buy any and all oil, gas and petchems products at a minimum guaranteed discount of 12pc to the six-month rolling mean price of comparable benchmark products, plus another 6pc to 8pc of that metric for risk-adjusted compensation."

Under the terms of the new agreement, Petroleum Economist understands, China will be granted the right to delay payment for Iranian production up to two years. China will also be able to pay in soft currencies that it has accrued from doing business in Africa and the Former Soviet Union (FSU) states, in addition to using renminbi should the need arise—meaning that no US dollars will be involved in these commodity transaction payments from China to Iran.

"Given the exchange rates involved in converting these soft currencies into hard currencies that Iran can obtain from its friendly Western banks—including Europäisch-Iranische Handelsbank [in Germany], Oberbank [in Austria] and Halkbank [in Turkey]—China is looking at another 8-12pc discount [relative to the dollar price of the average benchmarks], which means a total discount of up to 32pc for China on all oil, gas and petchems purchases," the source says.

Another positive factor for China is that its close involvement in the build-out of Iran's manufacturing infrastructure will be entirely in line with its One Belt, One Road initiative. China intends to utilise the low cost labour available in Iran to build factories, designed and overseen by large Chinese manufacturing companies, with identical specifications and operations to those in China, according to the Iranian source.

Transport infrastructure
The resulting products will be able to enter Western markets via routes built or enhanced by China's increasing involvement in Iran's transport infrastructure. When the draft deal was presented in late August to Iran's Supreme Leader Ali Khamenei by Iran's vice president, Eshaq Jahangiri—and senior figures from the Economic and Finance Ministry, the Petroleum Ministry and the Islamic Revolutionary Guard Corps—he announced that Iran had signed a contract with China to implement a project to electrify the main 900km railway connecting Tehran to the north-eastern city of Mashhad. Jahangiri added that there are also plans to establish a Tehran-Qom-Isfahan high-speed train line and to extend this upgraded network up to the north-west through Tabriz.

Tabriz, home to a number of key oil, gas and petchems sites, and the starting point for the Tabriz-Ankara gas pipeline, will be a pivot point of the 2,300km New Silk Road that links Urumqi (the capital of China's western Xinjiang Province) to Tehran, connecting Kazakhstan, Kyrgyzstan, Uzbekistan and Turkmenistan along the way, and then via Turkey into Europe, says the Iranian source.

The pipeline plan will require the co-operation of Russia, as it regards the FSU states as its backyard. And, because, until recently, Russia was weighing a similarly all-encompassing standalone deal with Iran. So, according to the source, the agreement includes a clause allowing at least one Russian company to have the option of being involved, also on discounted terms, alongside a Chinese operator.

Benefits for Iran
The Iranians expect three key positives from the 25-year deal, according to the source. The first flows from China being one of just five countries to hold permanent member status on the United Nations Security Council (UNSC). Russia, tangentially included in the new deal, also holds a seat, alongside the US, the UK and France.

“[The deal] will include up to 5,000 Chinese security personnel on the ground in Iran to protect Chinese projects”
"In order to circumvent any further ramping up of sanctions—and over time encourage the US to come back to the negotiating table—Iran now has two out of five UNSC votes on its side. The fact that [Iran foreign minister Mohammad] Zarif showed up unexpectedly at the G7 summit in August at the invitation of France may imply it has another permanent member on side," he adds.

A second Iranian positive is that the deal will allow it to finally expedite increases in oil and gas production from three of its key fields. China has agreed to up the pace on its development of one of Iran's flagship gas field project, Phase 11 of the giant South Pars gas field (SP11). China National Petroleum Corporation (CNPC), one of China's 'big three' producers, added to its 30pc holding in the field when it took over Total's 50.1pc stake, following the French major's withdrawal in response to US sanctions. CNPC had since made little progress developing SP11—a 30pc+ discount to the global market price on potential condensate and LNG exports could change that.

China has also agreed to increase production from Iran's West Karoun oil fields—including North Azadegan, operated by CNPC, and Yadavaran, operated by fellow 'big three' firm Sinopec—by an additional 500,000bl/d by the end of 2020. Iran hopes to increase projected recovery rates from these West Karoun fields, which it shares with neighbour Iraq, from a current 5pc of reserves in place to at least 25pc by the end of 2021 at the very latest. "For every percentage point increase, the recoverable reserves figure would increase by 670mn bl, or around $34bn in revenues even with oil at $50/bl," the Iranian source says.

A final Iranian benefit is that China has agreed to increase imports of Iranian oil, in defiance of a US decision not to extend China's waiver on imports from Iran in May. China's General Administration of Customs (GAC) figures released in late August show that, far from reducing its Iranian imports, China imported over 925,000bl/d from the country in July, up by 4.7pc month-on-month, from an already high base.

The actual figure is still higher, according to the Iranian source, with excess barrels being kept in floating storage in and around China; without having gone through customs they do not show up on customs data, but are effectively part of China's Strategic Petroleum Reserve.

https://www.petroleum-economist.com...hina-and-iran-flesh-out-strategic-partnership
 
I believe I’ve read something similar 5 years ago and then again 10 years ago etc...

When push comes to shove, no country on the planet (except our neighbor allies) want to see a strong Iran. Simply because not China, Russia, EU or the US would want to see Iran dictating energy price and flow. Which is exactly what Iran will do sooner or later. The powerhouses will and are doing everything to prevent that. Promises of large investments are part of that. And all drama we are witnessing today is because of that.
 
I believe I’ve read something similar 5 years ago and then again 10 years ago etc...

When push comes to shove, no country on the planet (except our neighbor allies) want to see a strong Iran. Simply because not China, Russia, EU or the US would want to see Iran dictating energy price and flow. Which is exactly what Iran will do sooner or later. The powerhouses will and are doing everything to prevent that. Promises of large investments are part of that. And all drama we are witnessing today is because of that.
well said....we've to invest on our domestic sources and human sources to make our economy powerfull and bring welfare for our people.....everybody avoid you if you are not strong(in every field;security and military,economy)
 
well said....we've to invest on our domestic sources and human sources to make our economy powerfull and bring welfare for our people.....everybody avoid you if you are not strong(in every field;security and military,economy)
Na sharghi, na gharbi! They knew! 40 years ago they knew they couldn’t rely on anyone!
 
https://www.bourseandbazaar.com/articles/2019/9/20/no-china-isnt-giving-iran-400-billion
https://www.bourseandbazaar.com/articles/2019/9/20/no-china-isnt-giving-iran-400-billion

A recent report from the London-based publication Petroleum Economist offers a cautionary tale of “fake news” having spurred an unprecedented debate about Sino-Iranian relations.

Quoting an anonymous senior source “closely connected” to Iran’s petroleum ministry, the article claims the existence of a major new agreement between Tehran and Beijing that could reflect “a potentially material shift to the global balance of the oil and gas sector.” The figures presented to back up this claim are astronomical—China will invest a total of $400 billion in Iran over the next 5 years, split between $280 billion in the development of Iran’s energy sector and $120 billion for infrastructure projects. This first round of investments is claimed to be part of a 25-year plan with capital injected in the Iranian economy every five years. Despite the attention that the report garnered, with follow-up articles in Forbes and Al Monitor among other publications, Petroleum Economist’s figures do not appear plausible.

China and Iran signed a comprehensive strategic partnership, the highest level in the hierarchy of Beijing’s partnership diplomacy, in 2016. On the occasion, Xi Jinping and Hassan Rouhani signed a comprehensive 25-year deal which included a series of multi-sector agreements intended to boost bilateral trade to $600 billion within a decade. Even considering the potential for trade following the listing of international sanctions after the implementation of the JCPOA, the goal was extremely ambitious, if not totally unrealistic.

Indeed, the re-imposition of US secondary sanctions in November 2018 has deeply impacted the level of China-Iran trade. As detailed in a Bourse & Bazaar special report, in the last trimester of 2018 Chinese exports to Iran dropped by nearly 70 percent, falling from the already low figure of $1.2 billion in October to a dramatic low of $400 million in December. Exports to Iran have now stabilized at just under $1billion each month.



Meanwhile, the flow of crude oil from Tehran to Beijing—undoubtedly the engine of Sino-Iranian trade—suffered a major slowdown due to the revocation of US oil waivers expired in May 2019. Despite China continuing buying Iranian oil in defiance of US sanctions, using ship-to-ship transfers and ghost tankers, the level of imports remain about half of pre-sanctions levels.

Post-November 2018 trade figures show a clear picture. Although China remains Iran’s most important foreign partner, Beijing has adopted a mixed policy vis-à-vis US sanctions—certainly bolder than European states, but still cautious. In short, the pattern of China-Iran trade suggests that a five-year, three-digit investment program is not credible, especially with oil imports at their minimum, secondary sanctions in place, and the poor record for project delivery of Chinese infrastructure projects in Iran. Moreover, it is unrealistic that Iran’s suffering economy could absorb such a massive injection of capital.

Petroleum Economist’s figures look even less realistic if looked from a broader perspective. According to Morgan Stanley, the total Chinese investment in the Belt and Road Initiative could reach $1.2-1.3 trillion in 2027. In May 2017, Ning Jizhe, the vice-chairman of China’s National Development and Reform Commission (CNDR), declared that Beijing’s investments in the BRI for the following five years (2017-2022) were expected to be between $600 billion and $800 billion. Therefore, it is hard to believe that China will invest almost the equivalent of two-thirds of its planned budget for its most ambitious and largest foreign project in Iran alone. If the Chinese were indeed set to spend $400 billion on Iran, the recent French proposal to extend a $15 billion credit line to restore JCPOA’s economic benefits would be completely useless given Chinese largesse.

The anonymous source painted an idealistic picture for Petroleum Investor, claiming that China has agreed to keep increasing its import of Iran’s oil in defiance of the United States and “to put up the pace on its development” of Phase 11 of South Pars gas field—which, ironically, represents one the clearest examples of Beijing’s difficulties in delivering its projects.

Most perplexingly, the source claimed that the deal “will include up to 5000 Chinese security personnel on the ground in Iran to protect Chinese projects”. Such a claim directly contradicts Beijing’s strategy of remaining disengaged from the Persian Gulf, especially considering the current tensions. Indeed, China’s apolitical approach to the region and good relations with Saudi Arabia and the UAE—with which China has comprehensive strategic partnerships—would be severely undermined by the presence of a Chinese armed contingent on the ground in Iran. The presence of foreign troops is also a political impossibility in Iran, where the refueling of Russian bombers at an Iranian airbase caused a political scandal last year.

With the exception of a Fars News piece quoted by Middle East Monitor, practically no Iranian nor Chinese official and semi-official news outlet have reported or confirmed the figures presented by Petroleum Economist. State news agency IRNA, which launched its Chinese channel only days before the news came out, had no corroborating report. When asked, Iran’s oil minister Bijan Zanganeh denied rumors about the $400 billion investment plan, succinctly stating: “I have not heard such a thing.” The head of the Iran-China Chamber of Commerce called the reports “a joke” and urged people to be more careful about the news they share.

The figures quoted by Petroleum Economist do not accurately reflect the future of Chinese investment in Iran. Nevertheless, the news achieved what could be assumed to be its original goal— to bait clicks.

No doubt, Iran is trying to put some pressure on the West, and perhaps on China itself, by reinforcing the idea of a strong, growing, and unique relationship between Tehran and Beijing. It should also be noted that before his trip to China at the end of August, Iran’s foreign minister, Javad Zarif published an op-ed in Global Times—a practice that is typical of Xi Jinping—calling, with quite unprecedented audacity, for a new phase in Sino-Iranian relations.

However, ties between Iran and China should not be overestimated and deserve careful consideration. In the short-term, Beijing represents Iran’s minimum insurance against US sanctions; in the long-term Tehran may be forced to more expansive eastward shift. But this will happen at the pace of China’s “strategic patience,” and there will be no $400 billion bonanza.
 
The art of the deal. When you smell blood, you go for the kill. Soon we will see a press conference with corrupt mullahs hailing historic partnership between China and Iran and will shock the world.It will stalwart, blocking US imperialist strangle hood on corrupt regime. Mother of all treaties and Iran is now the main cog in China's one Belt strategy. In reality, another sell out of national wealth and treasure happens behind the scenes that make Treaty of Turkmenchay look like a walk in the park. Then comes the assembly line for some POS mopeds which the propaganda troll will claim that it was built 100% domestically. All while the Roobah Mullah stands in the background shilling.

China Pulls Out of Giant Iranian Gas Project
Exit follows broader Chinese pullback from Islamic Republic amid U.S. pressure
By
Benoit Faucon
Updated Oct. 6, 2019 12:33 pm ET



China National Petroleum Corp. has pulled out of a $5 billion natural-gas project in Iran as escalating tensions threaten to sever Beijing’s trade with Tehran, a key lifeline for the Islamic Republic.

In a huge blow to Iran's prospects for weathering the tightening economic noose of US sanctions, and as the White House seeks to take's Iran's crude exports down to 'zero', China National Petroleum Corp - the state-owned parent company of China's second-largest oil producer, PetroChina, and one of the largest integrated energy groups in the world - has pulled out of a $5 billion natural-gas project in Iran, the WSJ reports.

This also just following last month's US sanctions on six entities, including a unit of China's COSCO Shipping Corp., which stood accused of deliberately purchasing and covertly attempting to transport Iranian oil.

Iranian oil minister Bijan Zangeneh confirmed Sunday that domestic company Petropars Co. is now in full control of a planned development project in the South Pars gas field as a result of China National Petroleum Corp. (CNPC) backing out of the deal. The Chinese company itself was to replace France's Total SA after it exited Iran, citing US repercussions related to Washington sanctions.

Zangeneh's statement was brief, but he acknowledged the Chinese state-run giant was “no longer in the project” and that the company “had pulled out of a contract” to develop the field, according to state media.

Washington will take it as another victory for its unprecedented and aggressive sanctions on Iran, given as the WSJ reports:

But CNPC officials have said the company struggled to find banking channels to transfer funds to Iran due to U.S. pressure. CNPC’s own bank, Bank of Kunlun, which is the main conduit for China’s Iran trades, has told customers it no longer accepts trades with the Islamic Republic, though it has said publicly it intends to keep its business with Tehran.

The move is also a blow to the Islamic Republic's natural gas supply needs. Given the majority of its electricity is generated via natural gas run power plants, the South Pars gas project is seen as crucial to maintaining domestic electricity supply levels.

China is Iran's last major international purchaser of its oil; however, the latest Chinese customs data has shown its Iranian imports in steep decline — now at a little above 200,000 barrels a day versus the 700,000 barrels a day imported prior to US sanctions hitting.
 
The art of the deal. When you smell blood, you go for the kill. Soon we will see a press conference with corrupt mullahs hailing historic partnership between China and Iran and will shock the world.It will stalwart, blocking US imperialist strangle hood on corrupt regime. Mother of all treaties and Iran is now the main cog in China's one Belt strategy. In reality, another sell out of national wealth and treasure happens behind the scenes that make Treaty of Turkmenchay look like a walk in the park. Then comes the assembly line for some POS mopeds which the propaganda troll will claim that it was built 100% domestically. All while the Roobah Mullah stands in the background shilling.
most likely them Chinese discovered that Irani leaders were in cahoots with "The Great Satan" all along (as evidenced by the fact that no neighbouring country is allowed to say boo to Iran no matter what the Persians do to them). they even commanded their Indian allies to build them a supply corridor through Chabahar to be used against China-Pakistan at a future date.

BTW. the post no. 1 is based on a rumour (falsehood).
 
most likely them Chinese discovered that Irani leaders were in cahoots with "The Great Satan" all along (as evidenced by the fact that no neighbouring country is allowed to say boo to Iran no matter what the Persians do to them). they even commanded their Indian allies to build them a supply corridor through Chabahar to be used against China-Pakistan at a future date.

BTW. the post no. 1 is based on a rumour (falsehood).

It is possible.

When lift beard of every Mullah, you see the Union Jack. When take off the robe, you see
s-l300.jpg


That is why it is always Marg bar Amrika, Marg bar Israel. You never hear anything about the England.
 
It is possible.

When lift beard of every Mullah, you see the Union Jack. When take off the robe, you see
View attachment 582699

That is why it is always Marg bar Amrika, Marg bar Israel. You never hear anything about the England.
by "The Great Satan" I meant US/Israel NOT England/UK. it is Americans who are protecting them, UK being in NATO, just gets dragged along
 
It is possible.

When lift beard of every Mullah, you see the Union Jack. When take off the robe, you see
View attachment 582699

That is why it is always Marg bar Amrika, Marg bar Israel. You never hear anything about the England.
It is possible.

When lift beard of every Mullah, you see the Union Jack. When take off the robe, you see
View attachment 582699

That is why it is always Marg bar Amrika, Marg bar Israel. You never hear anything about the England.

I often hear this from older Iranians living in the States the Brits caused the whole overthrow of the Shah in 1979 these were not pro Shah loyalists I would say they were Anti Western and Anti American as well
 
China Makes A Move On OPEC's No.2
By Simon Watkins - Oct 15, 2019, 5:00 PM CDT
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e378635145ab83a0f0f222662a94d44c.jpg



Following a political backlash in Iran over details of its plans to make Iran effectively a client state through various multi-layered oil and gas deals, China has switched its attention – for the time being at least – to Iran’s equally oil and gas-rich neighbor, Iraq. China has the advantage in Iraq that the northern part of the country – the semi-autonomous region of Kurdistan – is already under the control of its increasingly close ally, Russia, with its corporate proxy Rosneft having secured control over Kurdistan’s oil and gas infrastructure in a deal in November 2017.

Bridging this gap beautifully is the new development that in the long-running dispute between the south and the north regarding budget disbursements from Baghdad to Erbil in exchange for oil supplies from Erbil to Baghdad, China is to be appointed by Baghdad as its mediator in negotiations, a senior source who works closely with Iraq’s Oil Ministry told OilPrice.com last week.



As it was, the negotiations between Baghdad and Erbil over the budget-for-oil deal have been going nowhere and have been in a constant state of flux ever since the original deal was struck back in 2014. This deal involved the government of the Kurdistan region of Iraq (the KRG) agreeing to export up to 550,000 barrels per day (bpd) of oil from its own fields and those in and around Kirkuk via Baghdad’s State Oil Marketing Organization (SOMO). In return, Baghdad would send 17 percent of the federal budget after sovereign expenses per month in budget payments to the KRG. This agreement was superseded by another in October 2018 that required Baghdad to transfer sufficient funds from the budget to pay the salaries of KRG employees in exchange for the KRG handing over the export of at least 250,000 bpd of crude oil to SOMO. Since the beginning of this year, Baghdad has purportedly delivered on its side but the KRG has not.Related: Iraq's Return To Oil's Top Table

The sticking point from the KRG side has been the changing metric that Baghdad sought to impose for determining the budget disbursement levels following the independence referendum held in Kurdistan in September 2017. Although from the legal perspective the vote was not mandatory, the overwhelming support for independence – well over 90 percent of the Kurdish population in the north – catalyzed popular support against Baghdad until it was quelled, with the help of Iran. At that point, Baghdad took back on-the-ground control over the Kirkuk and surrounding fields and only held off from further expanding its military footprint across the KRG area because the U.S. signaled that this would not be a welcome development.

The U.S. did this because it had promised that the Kurds in Iraq would be given their independence within the next two to three years as a reward for their being the West’s boots on the ground in the fight against Islamic State: that was the deal. Events in the last week, however, with Trump opening the way for the annihilation of various Kurdish populations by the Turkish Army – which regards them as terrorists – have allowed Baghdad as well to take a less conciliatory tone in its dealings with Erbil.

Consequently, Baghdad has withdrawn even the much worse offer that was on the table – that had already been rejected by Erbil – in favor of allowing the Chinese government, through its own corporate proxy, China National Petroleum Corporation – to act as its intermediary in these budget-for-oil deal negotiations with the KRG. The previous deal on offer was that rather than the previous 17 percent share of Baghdad’s budget in exchange for a full quota of oil coming from the KRG, Baghdad would offer 12.67 percent. Baghdad said this figure was more in line with the percentage population of the KRG area in Iraq as a whole. “Basically, this deal will involve the Chinese doing a deal with the Russians and bribing the Barzanis to accept whatever deal is agreed between Beijing and Moscow,” said the Iraq source.



For China, given that it has temporarily had to shelve its plans for Iran due to a backlash in Tehran over various media revelations about the devil in the details – many of them exclusively appearing on OilPrice.com before they were further syndicated – regards Iraq as a worthy stand-in for the time being, both in terms of its massive oil and gas reserves and its geographical position. “A deal would have had to have been done with Iraq anyway in order for China to put into place the planned Middle East section of its ‘One Belt, One Road’ strategy, so this problem with Iran has just meant that Beijing has had to change the order of the deals,” the Iraq source told OilPrice.com.Related: Russia Scrambles To Save Energy Industry From Climate Change

“If you do a deal with Iraq, you are basically signaling your ongoing intentions to Iran as well, given the enormous economic, political, and military power then Tehran wields over Baghdad, and securing Iraq and Iran means that China will have a direct route for its ‘One Belt, One Road’ project into Europe, via both Turkey and the FSU [Former Soviet Union] states and then Russia,” the Iraq source added.

The Iraq deal that China is working on is similar in tone and range to that which had been accepted by Iran as part of the 25-year deal signed between Iran and China recently. In addition to being granted huge reductions on buying Iranian oil and gas, China would have been given the opportunity to build factories in Iran – and build-out infrastructure, such as railways - overseen by its own management staff from Chinese companies, that had the same operational structure and assembly lines as those in China, but utilising the currently cheap labour available in Iran. The deal on the table for Baghdad, according to the Iraq source, is remarkably similar, centered initially on Chinese companies undertaking various projects in Iraq in exchange for China receiving at least 100,000 bpd of oil from Iraq. This amount, when added to the current amount being exported to China, would mean that around 30 percent of Iraq’s total oil production will be going to Beijing.

This ‘oil for construction’ deal was agreed in broad terms last September during a visit by Iraq’s Prime Minister Adel Abdul Mahdi to Beijing, with the purpose of expanding China’s then US$20 billion of investment in Iraq at that point, in addition to the US$30 billion or so in annual trade between the two countries. It also follows the signing in 2015 by Abdul Mahdi - who was then Oil Minister – of Iraq’s agreement to be part of the ‘One Belt, One Road’ initiative. Completing the circle – and the temporal reordering of Iran first, then Iraq – is that many of these Chinese projects will relate to Iraq’s transport infrastructure, including railways, ports, and airports, the Iraq source concluded.

By Simon Watkins for Oilprice.com

 
In the face of f@ckers!

based on the OPEC statistics, China's oil import from Iran has increased by 8 times since the signing of the agreement.

And lots of the deals are still in the background.


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