Reuters in a report quoted industry sources as saying that it was not clear if CNPC had received approvals from Beijing to do so. However, they said chances that the move could strain relations between the US and China were already high.
"The possibility of Total's pullout is quite high now, and in that scenario CNPC will be ready to take it over fully," Reuters quoted a senior state oil official with knowledge of the contract as saying.
It also quoted an executive with direct knowledge of the project as adding that planning began "the day the investment was approved."
"CNPC foresaw a high probability of a reimposition of (US) sanctions," the executive said.
All the sources spoke on condition of anonymity because they were not authorized to speak to media.
Reuters had also last December said CNPC had already started talks with Iran over replacing Total in South Pars.
Under the terms of the agreement to develop Phase 11 of South Pars, CNPC could take over Total's 50.1 percent stake and become operator of the project.
CNPC already holds a 30 percent stake in the field, while Iranian national oil company subsidiary Petropars holds the remaining 19.9 percent.
So far, the Chinese oil giant, which already operates two oil fields in Iran, has spent about $20 million on planning to develop the field, Reuters further quoted the sources as saying.
The news agency further quoted another source close to Total as saying that the French company was analyzing the impact of new sanctions and whether it could get a waiver that would allow it to keep its stake.
CNPC is prepared to use its banking unit Bank of Kunlun Ltd as a funding and clearing vehicle if it takes over operation of South Pars, a senior state oil official was quoted as saying.
The bank was used to settle tens of billions of dollars worth of oil imports during the UN sanctions against Tehran between 2012 and 2015, the official added.
Most of the bank's settlements during that time were in euros and Chinese renminbi. The US Treasury sanctioned Kunlun in 2012 for conducting business with Iran.
If CNPC goes ahead, it would also likely have to develop crucial equipment, such as large-powered compressors needed for developing gas deposits on this scale, on its own.
Leading manufacturers like U.S. firm GE and Germany's Siemens could be barred from supplying to Iran under US sanctions, Reuters concluded.