Iran said on Tuesday it had suspended a contract with China's  National Petroleum Corporation International (CNPCI) for development of its North Pars gas field "until further notice," an Iranian official told the semi-official Mehr news agency.

"We will decide on the continuation of CNPCI activities  in the North Pars gas field when they fulfil their commitments in Iran's South Pars gas field, which is Iran's first priority," Mousa Souri, the managing director of Pars Oil and Gas Company, told Mehr.

Iran has the second biggest gas reserves in the world after Russia, but sanctions and other factors have slowed its development as a major exporter.

The offshore South Pars field, the world's largest reservoir of gas, contains about half of the estimated 28 trillion cubic metres of the country's gas reserves.

South Pars is shared by Iran and Qatar. The Iranian part is divided into 24 phases.

Many foreign companies have been forced to pull out from the Islamic state's energy sector due to the fear of sanctions.

The Islamic state has previously warned the CNPCI that it will be replaced by domestic companies if it does not step up work on phase 11 of the giant South Pars gas field.

Iran's new Oil Minister, Rostam Qasemi, said earlier that the Islamic state had no need for foreign investment in its vital oil and gas industries.

Tehran has recently excluded Russian energy giant   Gazprom from a major oilfield project. – Reuters