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 Petroleum & Chemical Corporation (Sinopec)
Sinopec is a subsidiary of the state-owned China Petrochemical Corporation (SASAC), and has been present in ّIran since at least 2003. The company trademarked “Sinopec” in 2009 and has been patenting various technologies since the early 2000s, in collaboration with its subsidiaries. These include SINOPEC Engineering Incorporation, Research Institute of Petroleum Processing Sinopec, Fushun Research Institute of Petroleum and Petrochemicals SINOPEC Corp, Shanghai Research Institute of Petrochemical Technology Sinopec, SINOPEC Research Institute of Petroleum Processing (RIPP) etc. All these companies are Chinese-owned.
Sinopec has trademarked a total of 42 patents since 2003, mostly for technologies and chemical processes used in the drilling and refining of oil and gas, according to Rooznameh Rasmi documents.
“Dragging its feet”: Sinopec’s patchwork oil and gas activities in Iran
The first public records of Sinopec’s activities in ّIran date back to 2003, when local news reports named the company as one of the contractors involved in the “Cross project,” which aimed to transfer and process crude oil from offshore wells in the Caspian Sea. In 2004, Sinopec signed an MOU to develop the Yadavaran oil field, estimated to have over 30 billion barrels in oil, and in 2005 acquired a 50% stake in the development of this field. However, the company struggled to meet the criteria set out by the Iranian government, according to various SHANA news reports.
In 2007, Sinopec won a service contract to raise the production level at Yadavaran to 100,000 barrels per day by 2015. The firm fell way behind its targets, and only managed to complete the project by 2017. Then, in 2019, NIOC quietly withdrew from the follow-on contract it originally signed with Sinopec to develop the next phase of the Yadavaran oil field. NIOC eventually took over. Despite the issues, Sinopec “remains very much in the frame to secure the contract for the second phase,” NIOC spokesperson Freydoun Kord-Zanganeh recently told SHANA news.
Sinopec has also been involved in the development of the North Azadegan oilfield. Located north of Ahvaz, the North and South Azadegan oilfield is Iran’s largest oil discovery in the past 30 years. Sinopec first entered negotiations with the Iranian government regarding Azadegan in 2016, after the cancellation of a previous contract with another Chinese oil & gas company, CNPCI.
This February, Sinopec entered negotiations with Iran to develop the second phase of North Azadegan, stating it had cooperated successfully in the initial phase, according to the state-run IRNA news portal.
Other downstream companies
Sinopec is not the only Chinese company seeking exclusive access to parts of Iran’s oil & gas business. Another three companies with exclusively Chinese ownership have trademarked business names or registered patents in Iran, and are thus poised to be the exclusive providers of oil rigs and other machinery, refining processes and equipment, 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.
China Oilfield Services Limited (COSL) is a subsidiary of the state-owned China National Offshore Oil Corporation (CNOOC). COSL entered the Iran market in January 2006, when it signed a $30-million deal with North Drilling Co. for oil drilling in the Caspian Sea.
North Drilling Co. is a Bonyad Mostazafan (BM)-owned entity that has been sanctioned by the US treasury.
COSL provided drilling rigs for various phases of the South Pars oil field (phase 14 and phase 16), according to SHANA news. COSL also patented a “measuring device for measuring consistency of cement slurry for a consistometer” in Iran in 2011, according to Rooznameh Rasmi.
A second company, Sichuan Honghua Petroleum Equipment Co. Ltd. trademarked its name in Iran in 2010 for “mining drills and geological exploration equipment,” “oil exploration,” “oil extraction pumps” and “oil drilling equipment,” among other trademarks.
This company is a subsidiary of Honghua Group, a global provider of oil & gas exploration equipment. Sichuan Honghua Petroleum Equipment Co manufactures drilling equipment and is the “largest land drilling rig exporter” in China, with a customer base in “North America, Middle East, and emerging markets including South America, India, Russia and Africa,” according to the cippe website.
In addition, Honghua Group states it has captured “60-70% of new Russian demand for onshore rigs since 2010, and holds more than a fifth of the market for such equipment in Russia.” This, again, puts Iran at a disadvantage. Because Russia is a larger, more lucrative market for this type of Chinese equipment, companies like Sichuan Hongua Petroleum Equipment are likely to delay their obligations to Iran in favor of Russian orders.
The final company is Ningbo Zhongyi Petrochemical Technology Co., Ltd, a downstream oil & gas company desulfurizes natural gas and provides desulfurization equipment and agents for refineries, according to its Chinese-language website. Last year in Iran, it patented an “Energy-Saving and Efficient Desulfurization Process by Fiber Membrane Countercurrent Amine Washing,” used in natural gas processing, according to Rooznameh Rasmi.