The two main companies responsible for China’s oil & gas activities are the China National Petroleum Corporation (CNPC) and  SINOPEC. Both of these are large energy concerns owned by the Chinese state, with hundreds of subsidiaries around the world. Their subsidiaries have filed registration documents in Iran, and acquired various contracts for the development of Iran’s oil & gas fields.

OVERVIEW: China National Petroleum Corporation (CNPC)

CNPC is a Chinese state-owned oil company which has ranked 4th in Fortune Global 500, an index of the world’s wealthiest companies, since 2017. 

CNPC has patented various technologies in Iran. In 2007, CNPC invested $26 million on Kish Island, according to the SHANA news portal. 

The following 8 CNPC subsidiaries are active in Iran, according to documents reviewed by Tehran Bureau:

Playing the Long Game: CNPC Companies on Kish Island

CNPC has established two subsidiaries with a stated interest in developing the gas field near Kish island. Identified in 2006, the Kish gas field is Iran’s largest gas discovery in recent history, and ranks among the 20 largest in the world. However, despite big announcements by several administrations, the field remains undeveloped. Kish Island, meanwhile, remains reliant on pollutant power generators and diesel imports from Bandar Abbas for its own energy needs.

Established in Kish in 2004, P.A.B National Kish was created to “explore, develop and produce oil and gas” and “sell crude oil and natural gas and their derivatives in accordance with the laws of the country and CNPC regulations,” among other activities.  All board members are Chinese, according to this Rooznameh Rasmi document.

Another CNPC company, Persia Technical Services Kish Limited, was established in Kish in 2013, according to a posting on the job search website Iran Talent. It is a subsidiary of Great Wall Drilling Company (GWDC), which is a subsidiary of CNPC. Persia Technical Services Kish is also an Exploration & Production (E&P) company. Its services include “Drilling Rig Services, Drilling and Completion Fluid Services, Cementing Services Casing and Tubing Running Services, Coring Services, Directional and Horizontal Drilling Services, Bilateral and Multilateral Drilling Services, H2S Services, Waste Management Services, Wireline Logging Services, Mud Logging Services, Well Testing Services, Acidizing Services, Drill String Maintain Services, etc.” 

Upstream, Exploration & Production (E&P) companies like P.A.B National Kish and Persia Technical Services Kish are typically valued by the size of the oil or gas reserves they can access. The large, untouched gas discovery in Kish implies that the value of these companies is potentially quite high. Their existence suggests that China has set up the financial and corporate infrastructure to develop the Kish gas field, but lacks initiative to do so, despite Iran’s growing need. 

Petrochina’s Failed LNG Transport Project 

CNPC trademarked the brand “Petrochina” in Iran in 2007, the same year its subsidiary PetroChina Company Limited began its activities in the country, according to Rooznameh Rasmi.  Also that year, the then-CEO of the National Iranian Oil Company (NIOC) Gholam-Hossein Nozari announced an agreement with PetroChina to sell Iran’s liquified natural gas (LNG), but the company failed to honor those obligations, according to SHANA news. 

Like its sister companies in Kish, PetroChina is an upstream, E&P company. In 2020, it patented a “A high-temperature diverting acid composition and preparation method”, a process used during well drilling, according to Rooznameh Rasmi.

From the Azadegan Oil Fields to the Cayman Islands Tax Haven: CNPC International

Investigations of international business registries show multiple CNPC subsidiaries, all based in different global tax havens, go by the name of CNPC International (CNPCI). The subsidiary involved in the development of the Azadegan oilfield is based in the Cayman Islands, a known tax haven, documents show. Another company, CNPCI (Cyprus) Ltd., was briefly responsible for developing the Masjed-e Soleyman oilfield, our previous reporting shows. 

In January 2009, Nozari signed a deal with CNPC to develop the North Azadegan oilfield, according to SHANA news. CNPC entered another agreement in the spring of that year to develop the South Azadegan oilfield. Located north of Ahvaz, the Azadegan oilfield is Iran’s largest oil discovery in the past 30 years. As in Masjed-e Soleymani, CNPC’s first large energy deal in Iran, the company soon proved unable to complete the project on schedule. 

By fall 2009, CNPCI purchased a majority of shares NIOC’s subsidiary, the  Swiss-based Naftiran Intertrade Company (NICO). In doing so, it effectively took over the NICO’s contract to develop the South Azadegan oil field, as the Iranian government, via NICO, was unable to finance the $2.5-billion project. 

Five years later, in 2014, the oil ministry canceled the CNPCI project due to a lack of progress.  The Chinese company had only completed 7 of the 185 oil wells required in phase 1 of the South Azadegan oilfeild’s development project and was “dragging its feet,” Iran oil ministry spokespeople told SHANA news. In 2016, however, the government announced NIOC was renewing negotiations with CNPCI and the second major Chinese energy concern active in Iran, SINOPEC, for the development of the second phase of the North Azadegan oilfield. 

The Chinese Companies Helping Iran Skirt U.S. Sanctions

Another CNPC subsidiary, Bank of Kunlun Co. Ltd, was sanctioned in 2012 by the U.S. Treasury for “providing financial services to designated Iranian banks and facilitating the movement of millions of dollars worth of international transactions.” The bank however, continued its transactions in yuan and euro with Iran until at least 2017, according to regulators. 

CNPC was also involved in the development of Phase 11 of South Pars, Iran’s half of the largest gas field in the world, in the Persian Gulf. Originally, Total of France was a 50.1% partner in the project, but withdrew in 2017 under the heavy pressure of sanctions. CNPC automatically took its place, but also withdrew later. This year, Iran signed a much-touted MOU with Russia to develop South Pars, but Russia’s actual intentions are doubtful. The current international sanctions against Russia following its invasion of Ukraine make it a direct competitor to Iran for energy exports to China. Helping Iran develop its own reserves would be against Russia’s own gas trade interests, at least in the near term.

Three More Subsidiaries With Oil & Gas Knowhow

Another three CNPC subsidiaries with exclusively Chinese ownership have trademarked business names or registered patents in Iran, and are thus poised to be the exclusive providers of machinery, chemical processes, and other essential components of the oil production process. In the long term, this places Iranian contractors at a disadvantage, because the existence of patents generally discourages the free transfer of technology and know-how.

Hebei Huabei Oilfield Rongsheng Machinery Manufacture Ltd (HRSB) is a “comprehensive petroleum machinery manufacturer,” according to the China International Petroleum & Petrochemical Technology and Equipment Exhibition (cippe) website. HRSB machinery “have been sold to all onshore and marine oil fields and gas fields in China and … exported to over 40 oil producing countries such as the U.S.A, Canada, Russia,etc.”

This company was active  in Iran in 2008, according to Rooznameh Rasmi. It trademarked “HRSB”  for “machinery used in the petrochemical industry, and machinery and other equipment used in oil extraction.” HRSB’s starting capital came from CNPC, according to its website. Rongsheng Machinery Manufacturer was featured as one of the 20 companies at the CNPC pavilion, according to a  2018 news item from the Cippe website.

CNPC and two more of its subsidiaries, both in E&P, are still active in Iran. In 2020, CNPC Chuanqing Drilling Engineering Co. Ltd. and its subsidiary Changqing Downhole Technology Operation Company patented a “recoverable instant thickening acid,” a chemical used to improve the performance of an oil well, in the country. The shareholders of both companies are all Chinese, according to Rooznameh Rasmi.

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