A decree expelling the China National Petroleum Corporation International (CNPCI) came into force on Tuesday evening by Iranian Petroleum Minister Bijan Zanganeh after the firm was repeatedly warned to face a prospect of expropriation for procrastination in meeting its promises in the South Azadegan gas field which the country shares with Iraq.  

Earlier on Tuesday, Roknodding Javadi, managing director of the National Iranian Oil Company, announced Iran's firm decision to expel the Chinese firm.

Iran repeatedly warned the CNPCI officially of expulsion, added Javadi, saying that Tehran will presently issue termination of its contract in the gas field.

Iranian Minister of Petroleum Bijan Zanganeh had in February voiced the ministry's dissatisfaction over CNPCI's performance in the field and gave it three months to meet its obligations regarding South Azadegan oil field or face expulsion from the project.

“The performance of the Chinese company is not assessed as favorable and the necessary warnings for expropriation have been given to this contractor,” Zanganeh said.

Earlier, Managing Director of Petroleum Engineering and Development Company (PEDEC) Abdolreza Hossein-Nejad issued a warning to CNPCI for procrastination in fulfillment of its obligations.

During his visit to Yadavaran oil field, Hossein-Nejad expressed dissatisfaction with the performance of the Chinese contractor.

In 2008, CNPCI signed a contract worth USD 2.5-billion with  the NIOC to develop the Yadavaran field, which Iran shares with neighboring Iraq.

The Chinese company was also supposed to raise production from Yadavaran oil field from 25,000 barrels per day (bpd) to 180,000 bpd and 300,000 bpd in two phases, but the field is currently producing only 26,000 bpd.

Earlier this month, CNPCI was given three months to meet its obligations regarding South Azadegan oil field or face expulsion from the project.

Iran’s production from this joint field is still standing at around 50,000 bpd, while Iraq is currently recovering 175,000 bpd of oil from its sector of this field and plans to raise its output to 400,000 bpd.

Last August, NIOC replaced China National Petroleum Corporation (CNPC) with the Iranian company, Petropars Ltd. (PPL), for the development of Phase 11 of the massive offshore South Pars gas field.

CNPC initially agreed with NIOC in 2009 to develop the only South Pars phase whose fate had not been decided.