What are China's economic interests in Iran?
China has stayed on the sidelines of Iran's conflict with Israel, urging a diplomatic solution. PHOTO: AFP
BEIJING - China, one of Iran's closest allies and the biggest buyer of its oil, has stayed on the sidelines of its conflict with Israel, urging a diplomatic solution.
Following are details of its investments in Iran.
Cooperation pact
Beijing has long backed US-sanctioned Tehran as part of efforts to deepen its strategic and economic heft in the Middle East. In 2021, they signed a 25-year cooperation deal, though full details were never disclosed and analysts say follow-up implementation has been weak.
However, Chinese investment in Iran lags behind what Beijing puts into other nations in the region.
'Chinese state-owned companies have largely stayed away, mostly out of fear of running afoul of US sanctions,' said Dr Bill Figueroa, a China-Middle East expert at the University of Groningen in the Netherlands.
The American Enterprise Institute estimated that total Chinese investment since 2007 at just under US$5 billion (S$6.4 billion), while Chinese commerce ministry data shows its direct investments in Iran by the end of 2023 totalled US$3.9 billion.
In contrast, Beijing invested more than US$8.1 billion in the United Arab Emirates between 2013 and 2022, and almost US$15 billion in Saudi Arabia between 2007 and 2024, the think-tank said.
Energy
China imports around 43 million barrels of oil per month from Iran – accounting for some 90 per cent of Iran's oil exports and roughly 13.6 per cent of China's crude purchases.
Around 65 per cent of total crude and condensate shipped through the Strait of Hormuz off Iran is destined for China, according to shipping data firm Vortexa.
China National Petroleum Corp (CNPC) in 2016 signed a US$4.8 billion deal with France's Total to develop the offshore South Pars gas field in the Gulf with an Iranian state firm.
CNPC's stake of 30 per cent was worth around US$600 million. However, the state-owned petroleum giant pulled out of the project due to US pressure in 2019.
CNPC also signed a deal in 2009 to develop the North Azadegan oil field, with the first phase valued at about US$2 billion. The first cargo of 2 million barrels was shipped to China in 2016.
China's biggest refiner Sinopec signed a US$2 billion deal to develop the Yadavaran oil field in 2007. In 2017, Sinopec signed a contract worth about US$2.1 billion to upgrade a refinery in Abadan near the Gulf coast. It remains under construction.
In 2024, China's LDK Solar reached a deal with Iran's Ghadir Investment Group for a large-scale photovoltaic power plant with investment of around €1 billion (S$1.49 billion). It was expected to generate 2 billion kilowatt-hours of solar power annually.
Railways
In 2018, China National Machinery Industry Corporation signed a 5.3 billion yuan (S$945 million) deal to expand and renovate a railway connecting Tehran with the cites of Hamedan and Sanandaj to improve connectivity in west Iran.
Also that year, a subsidiary of China Railway Construction Corporation signed a contract worth 3.5 billion yuan for the 263 km Kermanshah-Khosravi railway project in west Iran, with a construction period of 48 months.
China's Norinco International signed an agreement in 2018 to build the first tramway line in the Iranian city of Qazvin, at about US$150 million.
In 2017, China Eximbank and an Iranian state bank signed a US$1.5 billion deal to upgrade and electrify a 926km railway between Tehran and the eastern city of Mashhad as part of Beijing's Belt and Road Initiative. However, the project has stalled over financing negotiations.
Metals
In 2017, China's Metallurgical Corporation invested around US$350 million in the Sepid Dasht steel plant and won a design contract for a pelletising project. However, local media reported that the projects were delayed by financing issues. REUTERS
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