Iran Sanctions Fallout: China Set To Replace Total In Giant Iran Gas Project, As Beijing Launches New Iran Train Route

Last week, when commenting on the world's response to Trump's decision to pull out of the Iran nuclear deal, we said that while Europe still remains in no-man's land - after all Putin still remains the biggest supplier of Europe's energy needs, especially in the winter, Trump's decision to withdraw has officially pitted the US, Israel and Saudi Arabia against not only both Russia, but also China, whose interests in the region were until now, mostly dormant. And, as a next step, we said that "we now look forward to China deploying troops and military equipment to Syria and Iran as the inevitable next step in this escalating global proxy war."

But first, China will deploy a far more nuanced Iranian invasion force consisting of... its mega corporations.

According to Iran's PressTV, China’s state-owned CNPC - the world's third largest oil and gas company by revenue behind Saudi Aramco and the National Iranian Oil Company - is set to take over a leading role held by Total in a huge gas project in Iran should the French energy giant decide to quit amid US sanctions against the Islamic Republic.

China’s state-owned CNPC is set to take over a leading role held by Total in a huge gas project in Iran in case the French energy giant decides to quit amid US sanctions against the Islamic Republic.

Industry sources quoted by Reuters siad that while it was not clear if CNPC had received approvals from Beijing to take over from Total, they said chances that the move could strain relations between the US and China were already high.

"The possibility of Total's pullout is quite high now, and in that scenario CNPC will be ready to take it over fully," Reuters quoted a senior state oil official with knowledge of the contract as saying. The news wire also quoted an executive with direct knowledge of the project as adding that planning began "the day the  investment was approved."

"CNPC foresaw a high probability of a reimposition of (US) sanctions," the executive said.

Last December, Reuters reported that CNPC had already started talks with Iran over replacing Total in South Pars. Under the alleged terms of the agreement to develop Phase 11 of South Pars, CNPC could take over Total's 50.1% stake and become operator of the project. CNPC already holds a 30% stake in the field, while Iranian national oil company subsidiary Petropars holds the remaining 19.9%.  So far, Reuters said, the Chinese oil giant, which already operates two oil fields in Iran, has spent about $20 million on planning to develop the field.

Meanwhile, the question is what Total will end up doing: a source "close to Total" was quoted as saying that the French company was analyzing the impact of new sanctions and whether it could get a waiver that would allow it to keep its stake. That however may prove extremely problematic following the threat earlier today by Trump's new National Security Advisor, John Bolton, that EU firms would face US sanctions if they continued to work with the Iranian government.

And if Total calls it quits, China is already prepared to swoop in: according to PressTV, CNPC will use its banking unit Bank of Kunlun as a funding and clearing vehicle if it takes over operation of South Pars; the bank was used to settle tens of billions of dollars worth of oil imports during the UN sanctions against Tehran between 2012 and 2015, and is thus well-equipped to skirt US sanctions.

Sure enough, the US Treasury sanctioned Kunlun in 2012 for conducting business with Iran, however since most of the bank's settlements during that time were in euros and Chinese renminbi, there was little it could do in terms of credible punishment.

If CNPC goes ahead, it would also likely have to develop crucial equipment, such as large-powered compressors needed for developing gas deposits on this scale, on its own. And since leading manufacturers like U.S. firm GE and Germany's Siemens could be barred from supplying to Iran under US sanctions, it means even more Chinese companies will find willing demand for their services in Iran.

* * *

And just to make sure that trade relations between China and Iran only accelerate, China on Thursday launched a freight train service that connects its northern regions to Iran’s capital Tehran in what could be a major connectivity project of vital importance to the flow of trade between the two countries.   

The freight train service would take cargoes from Bayannur in the Inner Mongolia Autonomous Region to Tehran, PressTV reported. China sent an inaugural train toward Iran carrying 1,150 tonnes of sunflower seeds. It would travel a distance of around 8,000 kilometers through Kazakhstan and Turkmenistan and would arrive in Iran within two weeks.

China has launched a new freight train service from its northern Inner Mongolia Autonomous Region to Iran’s capital Tehran.

The new train route will shorten transportation time by at least 20 days compared with ocean shipping, according to a report by Xinhua news agency.

Establishing new train routes toward the Islamic Republic is accordingly seen as a gesture by Beijing that it wants to maintain trade with its biggest trade partner even when the sanctions are put into effect.

While the United States is now urging foreign companies to wind down their operations in Iran, China appears to be doing the opposite,” wrote the Washington Post in an analysis. And for once, the WaPo was spot on, even without assistance from FBI or NSA leaks.

“Thursday’s launch of a freight train connection was only the latest measure that Beijing has taken to intensify trade relations with Iran, and there seem to be no plans so far to give in to US demands.”  

In February 2017, China also launched a long-distance train service that would take cargoes from its east to Iran through a route of above 10,000 kilometers - what could be one of the world's longest rail routes.

Iranian officials have indicated that the ultimate aim is to extend the rail route to Europe, positioning Iran on a key stretch to the continent, the Guardian wrote in an analysis on the development. These are seen as part of China’s efforts to revive the ancient Silk Road – a trans-Asian trade route that connected the east to Europe and the Mediterranean Sea.

Comments

Brazen Heist Rapunzal Sun, 05/13/2018 - 17:17 Permalink

While its true that a small cabal of dynasties in power have zero allegiance to any form of nationalism, only money and power, to think that specifically empowering eastern populations is their plan is a little far-fetched. Alot of that empowering arose from outsourcing, and that was done mainly for financial reasons, - cost cutting.

The Western middle class forms the bulwark of the tax donkeys funding the empire. That they are shrinking and under strain from all orifices (financially, for now) is because the system is geared towards the top of the pyramid and wealth is getting sucked upwards more than is trickling down.

In reply to by Rapunzal

Rapunzal Brazen Heist Sun, 05/13/2018 - 17:47 Permalink

You are still thinking in nations, that’s what they want you to believe. They use nations but never cared. They played both sides in wars, always. There are many books written about how banksters supported Lenin and Hitler. How during the Vietnam war American Industry build plants in Russia and the same products were delivered to Vietnam, to kill Americans. What about the Rothschilds and Rockefeller support to the Nazis, incl help from Ford, GM, Standard Oil, IBM etc. it was never about nations. Only make believe for the dumb.

In reply to by Brazen Heist

Thordoom mark1955 Sun, 05/13/2018 - 18:15 Permalink

I do not think  anyone who has any IQ would launch a war with Iran.Iran in many regards has ben preparing for the war for decades. Iran could easily destroy the world economy by talking out Saudies oil and just sink any ship in the most important part of the oil export. But then again, we talking about US and Israel. Trump is an uneducated idiot and all he knows is that Iran kicked  US out of their country and that in his,quite frankly neocon view where US is the supreme Emperor of the world unacceptable. Having the little devil Bibi whispering to his ear together with his idiotic daughter and Kushner, Bolton as one of the last people talking to him when making decision, we might end up in a real shitshow if Europe will not grow up some balls and tell US to f..k off. They won't. They are slaves to US and always will be unless regime change in Germany.

In reply to by mark1955

caconhma TheWholeYearInn Sun, 05/13/2018 - 18:27 Permalink

"Trump is out of his league in geopolitics. He should have stuck to real estate, casinos, & pornstars"

Trump's ventures into casino business almost bankrupted him. Trump has been saved by the banks that completely control him today.

As for Trump's real estate business (as well as his son-in-law Kushner) is a very marginal player. One writer has questioned Trump real estate business successes. Trump has sued him. The writer has forced Trump to open his books and then immediately settled the case, again using a No-Disclosure agreement. This writer was on NPR  and stated that he cannot disclose details of Trump's net worth but it is substantially much less than Trump is trying to portray it. No wonder that Trump is the first US President who refused to show his tax returns.

Trump is a pimp and a prostitute at the same time. This is the only business where he had some successes.

 

In reply to by TheWholeYearInn

Zappalives Sun, 05/13/2018 - 17:04 Permalink

Here is the result of 40 years of treason by our us/corp.gov.

Slimy ass nixon got the ball rolling................all downhill for us peeps since.

None dare call it treason.

falak pema Sun, 05/13/2018 - 17:15 Permalink

haha!

The Duck is now the TRUE Manchurian candidate.

That should make its EU allies soo... happy! 

Putin and Duck make Chinese sweet n sour and Peking duck!

Oh MAO! Just waoh !

Brazen Heist Herodotus Sun, 05/13/2018 - 17:21 Permalink

This is getting good. Just imagine if Russia, China, India, Turkey and the EU continue to do business with Iran. What is Uncle Dumb Dumb going to do? Sanction the entire world? Game theory is not in his favour here.

This has the potential to become the first shot across the bow for how a multi-polar world may be effective. If US sanctions are successfully resisted with Iran, the limitations to US financial bullying will become evident.

 

In reply to by Herodotus

peopledontwanttruth Brazen Heist Sun, 05/13/2018 - 17:52 Permalink

You won't have to imagine this.   This is good to happen.  Iran is going to arise from nowhere.   

They've stood up to the bully and will shock the world soon.   I've said what is unfolding for years.   The scriptures point to Persia coming out of the abyss.   Europe will follow.  

This will set the precedent for WWIII and the Great Day of God Almighty.  

Our battle is with the unseen wicked demons.   Why do you think there's so much animosity towards Iran.  The demons know this is their end.  

In reply to by Brazen Heist

Thordoom Brazen Heist Sun, 05/13/2018 - 18:26 Permalink

Iran has 80 million young people looking forward for all the modern tech, cars merch from all roudn the world.Has gas and oil and minerals to offer. Well educated people who wants the modern shite. That is a huge market for China and Russia.Both China and RUssia know  well the US market won't be there forever especially when this mega bubble collapse. They preparing for the new market and Iran is the big thing.US is killing itself with this sanction idiocy. 

In reply to by Brazen Heist

SomeBrokersHav… Sun, 05/13/2018 - 17:26 Permalink

Trump's pivot to Asia... leave Europe out to dry with it's imminent economic crisis, give China a politically toxic asset(iranian gas) from the Europeans in exchange for....China is where the deals will be made, what deal would Trump want with Europeans, they bring nothing to the table at the moment that he wants to eat.

Davidduke2000 Sun, 05/13/2018 - 17:26 Permalink

Although Russia has good relations with Iran, its good relations with israel will hinder its business with Iran.

the Big winner is China , as China is no friend of israel and any country that hates israel will have huge trades with China.

Putin should reconsiders who can be friend and at what cost.