TEHRAN: China should fulfill its duties in developing a phase of Iran's South Pars gas field or the contract would be cancelled, the semi-official Mehr news agency Friday quoted the country's top oil company as saying. Tehran signed a $4.7 billion contract with China National Petroleum Corporation (CNPC) in 2009 to help develop phase 11 of South Pars, replacing France's Total SA which it had accused of repeated delays. Mehr said the National Iranian Oil Company (NIOC) had warned that it would "replace CNPC with domestic companies" if the Chinese corporation continued to delay the project. Iran has the second biggest gas reserves in the world after Russia, but sanctions over its disputed nuclear program and other factors have slowed its development as a major exporter. Iran is unable to access the technology it needs to build liquefied natural gas (LNG) facilities. The offshore South Pars field, the world's largest reservoir of gas, contains about half of the estimated 28 trillion cubic meters of the country's gas reserves. Mehr said CNPC officials were reportedly facing "financial problems" to provide the required capital for investment in the project. Iran has increasingly shifted to Asian countries, including China, to develop its oil and gas fields. The South Pars reservoir is shared by Iran and Qatar. The Iranian part is divided into 24 phases. Iran said last year production at South Pars rose by nearly 30 percent during the 2009-10 year and that the field is expected to generate income of up to $130 billion annually once all its development phases are completed.
