http://www.rferl.org/featuresarticle/2006/02/e4e2b10c-95f0-4b9c-826b-0c68922bfff5.html
Tuesday, February 21, 2006
Iran/China: Oil Deal Reflects Geostrategic Realities
By Breffni O'Rourke
Iranian oil refineries (file photo)AFPChina and Iran are reportedly close to
signing a multibillion-dollar agreement to develop the big Yadavaran oilfield
in southern Iran. The semiofficial magazine "Caijing" reports that a senior
Chinese delegation from the National Development and Reform Commission could
arrive in Tehran to finalize the deal as early as March. Word of the move comes
amid the intensifying row between Iran and the international community over the
aims of Iran's nuclear program. Does it indicate that China will do "business
as usual" with Iran despite concern that Iran is secretly trying to develop
nuclear arms?
PRAGUE, 21 February 2006 (RFE/RL) -- The Yadavaran oil field has crude oil
reserves estimated at three billion barrels. That appears to be an irresistible
statistic for China, whose oil-hungry economy is slated to grow another 9
percent this year.
The Yadavaran project could add up to 300,000 barrels of crude per day to
China's oil supplies -- a source Beijing is unlikely to ignore given its need
for hydrocarbon energy. "China is approximately the only country which does not
condemn [Iran] for the moment, so it is becoming more and more important [to
Iran], which is good for China so that it can get its energy."
Iran Important To China
The head of the Overseas Projects Department of the Chinese state oil company
Sinopec, G.G. Li, told RFE/RL from Beijing that China values Iran as a
continuing source of energy.
"Of course Iran, in terms of energy, with its oil, is important for the Chinese
economy, for Sinopec, I believe that," he said.
Some analysts say that to get at the oil, China would not hesitate to break any
sanctions that the United Nations Security Council might impose on Iran because
of suspicions over the aims of its nuclear power program.
Using Iran?
But senior analyst Manuchehr Takin, of the Center for Global Energy Studies in
London, thinks that's a scenario sketched too starkly in black and white. "In
terms of geopolitics at a higher level, China might weigh in its relations with
Russia and the United States and others, and in the [United Nations'] Security
Council there [might be] other deals, and they have to give and take; it could
be that Iran could be sacrificed in all of this," Takin said.
Takin notes that much to the surprise of Tehran, China as well as Russia sided
with the United States and European countries at this month's board meeting of
the International Atomic Energy Agency, which decided to report Iran to the UN
Security Council -- a move which could eventually lead to economic sanctions
being imposed.
This could explain why Tehran and Beijing -- after several years of delays --
want now to quickly conclude a deal to develop the Yadavaran oil field before
sanctions could be applied.
Ready To Do Business
China's Sinopec will reportedly have a controlling 51 percent stake in the
Yadavaran project, with the National Iranian Oil Company (NIOC) taking about a
20 percent share. But foreign companies are also eager prospective partners.
India's Oil and Natural Gas Corporation is buying into the project, and the
Anglo-Dutch Shell -- the world's second biggest oil company -- is also
interested.
Shell last year supported Sinopec in preparing a technical assessment on
developing the new oilfield. Sinopec later handed this assessment to Iran's
NIOC, and there have already been discussions on the proposal.
Shell spokeswoman Caroline Wittgen told RFE/RL from company headquarters in
London that Shell remains "interested in participating in the future
development of Yadavaran." She did not elaborate.
Analyst Takin says big oil companies are accustomed to working in difficult
sociopolitical environments and are not easily deterred by the prospect of
sanctions on Iran. "They have been for a 100 years taking risks in turbulent
politics, before and after the war and through history in different parts of
the world where local conflicts have been going on, and oil companies have been
involved in these operations, that is how they make money, and they are not
going to get out of Iran quickly," he said.
The broad backing for the Yadavaran project illustrates the difficulties facing
the U.S.-led effort to deter Iran from pursuing its nuclear program.
Beijing And UN Sanctions
China was reluctant to support the IAEA decision to report Tehran to the UN
Security Council, and China -- a veto holding member of the Security Council --
does not usually favor the concept of sanctions, which it sees as an
infringement of a nation's sovereignty.
This means that even if the nuclear issue results in the imposition of punitive
UN measures against Iran, they are unlikely to be so severe as to isolate
Tehran.
Jean-Philippe Beja, a senior analyst at the Center for International Studies
and Research in Paris, says Iran has continuing leverage on Beijing because of
its oil resources.
"China is approximately the only country which does not condemn [Iran] for the
moment, so it is becoming more and more important [to Iran], which is good for
China so that it can get its energy; in a way the Iran-China relationship is a
win-win situation for both," he said.
China's Foreign Ministry reiterated today its call for a diplomatic compromise
to resolve the nuclear row.
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