OREANDA-NEWS. March 31, 2014. China could lose a USD4.7 billion contract to develop Iran's giant South Pars gas field if delays on the project persist, an Iranian deputy oil minister said.

The warning comes as Iran's oil minister, Bijan Zanganeh, has vowed to shake up the country's largest industry, which has suffered years of decline thanks to mismanagement and the effect of international sanctions.

State-owned China National Petroleum Corp. was awarded a USD4.7 billion project in South Pars in 2009, after international pressure forced France's Total SA FP.FR +1.03% to pull out. The South Pars field is the largest gas reservoir in the world not mixed with oil.

But in an interview with The Wall Street Journal, Mansour Moazami, Iran's deputy oil minister for planning, said there had been "many, many, many delays for the contract in South Pars."

"We are giving a first warning, a second warning. Maybe in the end, we will terminate the contract," Mr. Moazami said.

CNPC declined to comment immediately and didn't respond to emails and fax requests for comment.

Despite his comments, Mr. Moazami said Iranian companies operating in South Pars were also experiencing delays to their work. The deputy minister blamed a shortage of finance and key technologies, as well as a lack of experience and mismanagement at domestic contractors.

He said his favored option would be to maintain existing contracts if the problems are resolved.

The delays at South Pars have led to a shortfall of 35 billion cubic meters a day of the gas Iran needs domestically, the official said. Despite holding the world's largest gas reserves, the country has been forced to replace the commodity with refined oil products to fuel its power stations.

Iran is also racing against time because South Pars' reservoir is shared with neighboring Qatar, Mr. Moazami said. The emirate has been able to develop its side of the field faster because it isn't subject to sanctions.