Tehran announced on Tuesday that it was cancelling a contract with state oil company China National Petroleum Corp (CNPC) which sought to develop a giant oil field in Iran. The contract is valued at $2.5 billion.

The cancellation comes as Beijing's role as replacement of Western firms bumped into some problems.

Like Us on Facebook

In 2010, a European ban on investments in the Islamic Republic caused Western oil companies to pull out of Iran. China then stepped in as the alternative investor.

However, Iran had struck an interim deal with the six world powers, causing the republic to increase its assertiveness toward Beijing. According to some Iranian officials, China has exploited the international sanctions to enter the deal.

Shana, the oil ministry website of Iran, cited National Iranian Oil Co managing director Roknoddin Javadi announcing the termination of the firm's oil-field development in South Azadegan.

CNPC has yet to comment on this news.

Upon implementation of international sanctions on the Islamic Republic, Western companies have pulled out of development projects in the oil and automotive sectors. Chinese companies, on the other hand, have filled in the roles left in the wake of the said sanctions.

However, there are some oil officials from Iran that say China is rendering quality that is below the set standard. They also allege that China's drilling equipment and services are overpriced, and that these factors cause delay in Iran's projects.

Chinese officials, on the other hand, reason that they are having a hard time securing funding and technologies need for the projects in Iran. They also said Iran's contractual terms are difficult for them.

When Iran inked the interim nuclear deal with the six countries last November, the Islamic Republic has gained hope of fixing it relations with China through the re-entry of Western firms in the previously vacated industries.