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China national petroleum corp suspends investment in Iran's South Pars

China National Petroleum Corp (CNPC) has suspended investment in Iran's South Pars natural gas project in response to U.S. pressure and to minimize tensions amid trade talks between Beijing and Washington, three Chinese state oil executives said.

South Pars is the world's largest gas field and CNPC's investment freeze is a blow to Tehran's efforts to maintain financing for energy projects amid the re-imposition U.S. sanctions on its energy sector earlier this year.

Iran said on Nov. 25 that CNPC replaced Total as the operator of Phase 11 project at South Pars after the French company ended its participation rather than violate the sanctions.

The investment halt followed four rounds of talks in Beijing, including one as recently as October, with senior U.S. officials who urged CNPC to refrain from injecting fresh financing in Iran, said one of the sources, an executive with direct knowledge of the matter.

The U.S. quit the pact in May and re-imposed sanctions because it did not curb Iran's ballistic missile program and to pressure the country to stop supporting proxies in Syria, Lebanon, Iraq and Yemen. The first source said that Iran has 120 days to review CNPC's role in South Pars and decide whether to keep the Chinese firm as a dormant investor or cancel the deal.

Experts suggest that without CNPC providing sub-contracting engineering work and supplying production equipment, the Iranian side will have difficulty maintaining the oil output.

North Azadegan, in southwestern Khuzestan province, is estimated to be pumping close to 80,000 barrels per day of crude oil after production started in 2016, according to CNPC's website.