Iran and China Suspend $3.3 Billion LNG Project, Mehr Says

Iran and China suspended a contract to build a liquefied natural gas plant in the Persian Gulf port of Asaluyeh “until further notice,” the Mehr news agency reported, without saying where it obtained the information.

The governments decided to halt the 2.6 billion euro ($3.3 billion) contract because the Chinese group involved was unable to finance the project, the state-run agency said today.

Iran LNG Co., an affiliate of the National Iranian Gas Export Co., signed the accord with Chinese counterparts in 2008, Mehr said. The facility, to be built in two phases over six years, was to produce 10.5 million metric tons a year of LNG and other products such as gas condensate, Mehr said.

Iran holds the world’s largest deposits of natural gas after Russia, according to BP Plc data. Gas producers worldwide chill and convert the fuel into a liquid so as to export it more easily using specialized tankers. Iran faces tighter international sanctions on its energy and financial industries because of its nuclear program, which the U.S. and allied nations say may be conceal an effort to develop atomic weapons. The Gulf nation counters that it wants nuclear expertise for energy and other peaceful purposes.

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