Driving Iranian oil export to zero in short term not easy: Energy expert

TEHRAN, Oct. 27 (MNA) –Touching upon the importance of oil market stability for the US, senior energy expert Omid Shokri says it is not easy to drive Iran’s oil export to zero in short term.

Following the brutal killing of Saudi Journalist at the Saudi consulate in Istanbul, There have been lots of tensions between Saudi rulers and their western allies particularly the US.

The US President Donald Trump has had different contradictory and weak stances towards the scandal. Despite threatening serious punishments against killers of the Saudi journalist at the same time Trump calls the Saudi regime as an important ally for confronting Iran.

The issue was discussed with Omid Shokri Kalehsar, a senior senior energy security and policy analyst in Washington.

Referring to the significance of oil market stability he said, “Stability in world oil market is in favor of US. Any increase in oil market directly affect energy security in the US. US planning to drop Iran oil export to zero but in short term it will not be easy to drop Iran oil export. At long term with sufficient oil supply by major oil exporter Iran’s role in world oil market may decrease, Iran needs to keep its share in regional and world oil market. Iran needs to play active energy diplomacy if interested to keep and increase its share in regional and world oil market. It can be seen that Iran’s oil export will decrease more than %50 in contrast to post nuclear agreement.”

Asked about the possible effect of the recent tensions between Riyadh and Washington over the brutal murder of Saudi journalist Jamal Khashoggi at Saudi consulate in Istanbul, Shokri said, “Current political tensions between Iran and Saudi Arabia, gives an opportunity to Saudi Arabia to export more oil to reduce Iran’s share in world market.

Current tension between US and Saudi Arabia, over Khashoggi hold a potential to affect world oil market but stability in oil market is US priority and also US trying to drop Iran oil export to zero. As mentioned before it will be hard to US to drop Iran oil export to zero. I think US and Saudi due to mutual interest are interested to manage any tension with aimed of decreasing Iran’s role in world oil market. Saudi has promised US to buy weapons from US and value of weapon agreements is above $100 billion. This agreement is very important for US economy and creation of job opportunities for US workers.”

Interview by Payman Yazdani

 

Mehrnews.com

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The fate of Iran’s energy development plans under US pressure

Tehran, Iran, November 18

By Mehdi Sepahvand – Trend:

A recent expression of doubt by Patrick Pouyanné, the chief executive officer of France’s energy giant Total, whether to carry out cooperation with Iran has strengthened worries over the fate of Iran’s energy development projects.

 

Omid Shokri, a Washington-based energy analyst, told Trend November 18 that “Total or any other oil and gas company is interested to have good relations with US,” adding, it is possible for Total to withdraw from South Pars field.

 

Total’s chief executive officer last week said under political pressure, his company is liable to leave the $4.8 billion deal with Iran. “If we cannot do that for legal reasons, because of [a] change of [the] regime of sanctions, then we have to revisit it,” he said.

 

Total last week increased its US presence with the purchase of a portfolio of liquefied natural gas assets from Engie (ENGIY), including the company’s stake in the Cameron LNG project in Louisiana, one of the first new gas export terminals in North America.

 

Sealed a few months ago, the deal with Total over the development of South Pars gas field used to be vied by Iran as an icebreaker and itself a discouragement for new sanctions on Iran.

However, last month US President Donald Trump unveiled a tough and comprehensive new policy towards Iran. He accused Tehran of violating the 2015 nuclear accord (which had paved the way for removal of sanctions) and announced that he would no longer certify that the lifting of sanctions was in US interests.

 

Shokri believes that major to-be partners of Iran’s oil and gas companies are waiting for US Congress decision about Iran and nuclear agreement.

 

This is while Iran used to cherish the nuclear deal as a means to open way for the development of its oil and gas industries, which had been kept outdated by years-long sanctions.

Iran’s economy is heavily oil-dependent. In the early 2010s, sanctions efficiently stifled the country’s oil revenues as its exports dropped from 2.3 mbpd to 1 mbpd.

 

Iran’s oil, gas, and petrochemical infrastructure are not by far as efficient as they could. Many of the country’s oil fields are in the second half of their lives and need restoration or else they lose profitability.

https://en.trend.az/business/economy/2823946.html

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What connects Turkey and Iran? – A look from Washington – EXCLUSIVE

Omid Shokri Kaleshar

Senior Energy Security Analyst, Washington, specifically for Eurasia Diary

Yesterday Turkish President Recep Erdogan negotiated on the regional crisis with the Iranian President Hassan Ruhani and, in particular, a referendum on Syria and Iraq with Iranian officials. Turkey suffered more from the Syrian crisis and presented about 3 million Syrian refugees living there. By October 2017, Turkey donated about $ 30 million to Syrian refugees. Iran and Turkey together with Russia have the potential to solve the Syrian problem, but they also need to cooperate with the US on this issue.

The Iranian and Iraqi forces conducted trainings near the border with the autonomous region of Kurdistan in Iraq, especially after tension raised after the referendum on independence. Last week, the head of the Turkish military headquarters, General Hulusi Akar, visited Tehran for talks with the leading military and political figures of Iran, who are expected to deal with border security and the fight against terrorism, along with regional problems.

 

Turkey and Iran agreed to strengthen military ties after referendum in Iraqi Kurdistan, where more than 90% of population voted for independence. Iran with Iraq and Turkey can expand military cooperation and conduct military exercises near the borders of Iraq in order to effectively counter regional instability.

There is a Kurdish minority lives in both of countries and they want to create a Kurdish state that directly affects national security, and it is expected that they will apply the same policy in this matter. Energy-intensive Turkey imports large volumes of natural gas from Iran. Both countries are seeking to enhance banking and trade ties in order to triple bilateral trade to $ 30 billion a year in the coming years after the lifting of international sanctions against Tehran.

The preferential trade agreement between Turkey and Iran turned out to be a huge disappointment during the first two years, when bilateral trade lagged behind the $ 35 billion target that the deal was supposed to reach. The agreement, which entered into force on January 1, 2015, aimed at reducing tariffs for about 300 products in order to triple the volume of trade. The results, however, were far from ideal, not even reaching one-third of the goal. While the Iranian market caused the appetite of the world’s trading giants, Turkey showed itself in a very favorable position, being the closest neighbor with already existing tariffs. Nevertheless, there were many disappointments. Despite the lifting of sanctions, Turkish-Iranian trade in 2016 was 100 million fewer than in the previous year, which meant the collapse of the preferential trade deal in just two years.

 

Starting from the first year, the deal resulted in an unexpected result: instead of growth, the volume of trade between the two neighbors declined. Turkish-Iranian trade amounted to 9.76 billion dollars at the end of 2015 dollars. Not only at 25 billion dollars smaller than the target, but also by $ 4 billion below the level of 2014 in the amount of 13.7 billion dollars. In 2016, Turkey’s exports to Iran amounted to 4.97 billion dollars. compared with 3.66 billion dollars. in the previous year, while imports from Iran, including natural gas, amounted to 4.7 billion dollars., compared with 6.1 billion dollars. in 2015.

Turkey had a positive balance of trade with Iran for the first time in 16 years. Even if this is a small surplus (only about $ 270 million), the fact that the balance is changing in favor of Turkey is a noteworthy development, the result of a steady trend over the past four years. Considering the instability in Iraq and the referendum in Iraqi Kurdistan, Iran has the potential to supply oil and gas to Turkey.

Iran and Turkey should prepare a joint plan, which take into account their national interests regard to the regional crisis, especially in Iraq and Syria. Instability in the region does not benefit the regional states, and it should be noted that both countries are neighbors. The regional crisis requires regional cooperation, and also with the main actors in the region, no country in itself has the capacity to address the regional crisis.

In summary, Iran and Turkey have their own interests in the region, and in some circumstances there is a clash of interests, but by 2017, after the Syrian crisis and after the referendum in Iraqi Kurdistan, both countries, cooperating with Iraq on the issue of Iraqi Kurdistan, and with Russia, and with the United States in the Syrian crisis, should play a more active role. Instability and chaos in these regions directly affect the stability and security of Iran and Turkey. Regional cooperation and large entities in the region are needed to solve the regional crisis.

http://ednews.net/en/news/interview/196428-what-connects-turkey-and-iran

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Steps Ahead: Russia’s Gazprom Outfoots Europe, Mulls LNG Plant in Iran

Russia’s Gazprom is going to sign a contract with the National Iranian Oil Company (NIOC) to build a liquefied gas plant in the Islamic Republic. The facility will use natural gas from Iran’s South Pars and the end product will be exported to India, Cambodia and Laos.

The two sides are likely to finalize the contract at the St. Petersburg International Economic Forumopening today, Iran Daily reported, citing Fars News Agency.
In an interview with Sputnik, independent Iranian energy expert Omid Shokri Kalehsar said that by pitching such a contract to the Iranians, Gazprom had outpaced its European partners as Iran was only panning to hold tenders for the building of LNG-producing mini-plants.

“The ground for the launch of a number of major bilateral projects, including in the energy sector, was prepared when President Hassan Rouhani visited Moscow in March. European and Russian companies waited for the end of the presidential elections in Iran to thrash out a deal, butr Gazprom got ahead of them all negotiating with our Energy Ministry and NIOC the construction of an LNG plant,” Kalehsar told Sputnik Persian.

He added that with a new government now in place in Tehran, Russia was likely to bolster its position in the Iranian gas sector and that the signature of a pertinent agreement would come as a big step forward in this direction.

Southeast Asia tops the list of Iran’s trading partners and liquefied gas could be a welcome addition to the Iranian exports to the region.

“In view of the growing consumption of liquefied natural gas in a populous country like India, the construction of an LNG plant is highly justified and Russian companies could be of great help here. We could start by setting up a joint venture (by Gazprom and NIOC) to build such a plant and could then export compressed gas to Laos, Cambodia and India,” Omid Shokri Kalehsar continued.

Nikolai Kozhanov, an Iranian-affairs expert in St. Petersburg, pointed to the problems with the planned construction of an LNG plant in Iran.

 “I’m skeptical about export-oriented gas projects in Iran, all the more so when we talk about LNG technologies. One problem is that Iran is consuming more natural gas than it produces and I don’t think it will be have enough gas to sell abroad any time soon. Another problem is that the technology of LNG production is still in a development stage in Russia, which cannot buy them abroad due to the sanctions. That’s why I think that Gazprom is either working for the long haul or has a way to acquire the knowhow and equipment from its Western partners,” Kozhanov said.

“I still don’t believe that such a project could be implemented in Iran, at least for now,” he added.

Russia is planning to expand economic cooperation with the Islamic Republic of Iran in the oil and gas industry to ensure sustainable economic development, President Vladimir Putin said after meeting his Iranian counterpart, Hassan Rouhani in Moscow

https://sputniknews.com/middleeast/201706011054197815-russia-iran-lng/

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Cooperation of Russia, Turkey and Iran ‘Would Help to Resolve Syrian Crisis’

At the meeting on August 9 in St. Petersburg, Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan will discuss ways to resolve the ongoing Syrian crisis, and focus on Iran’s role in this regard, Virginia-based Iranian political analyst Omid Shokri Kalehsar told Sputnik.

According to Kalehsar, author of The Role of Energy in Iran-Turkey Relations, both leaders will use Erdogan’s visit to Russia as an opportunity to discuss the Syrian problem and ways they can work together to resolve the crisis.

“I think that at tomorrow’s meeting, the Turkish and Russian leaderswill discuss the Syrian topic in detail and use this opportunity to discuss a trilateral cooperation to resolve the crisis. It means that they will also talk about Iran, which plays a crucial role in the Middle East,” the expert said.

Until recently, Turkey was supporting forces opposed to the secular government of Bashar Assad in Syria, while Iran and Russia assisted the Assad administration in its struggle with Islamic fundamentalist extremists, whose objective is to establish a theocracy under Sharia Law. Russian support to Syria ranges from humanitarian aid to joint anti-terrorism military operations involving the Russian Aerospace Forces.

“If Turkey and Russia will be able to reach a common position on Syria at the initial stage and then, at the second stage, reach an agreement on close cooperation with Iran, the joint potential of these three countries in the expedient resolution of the Syrian crisis will increase,” the expert said.

Earlier, Russian officials stated that Moscow hopes for Turkey to assume a more constructive stance on the Syrian crisis at the upcoming meeting.

“Of course, the Syrian crisis will be discussed in great detail, and we hope that the Turkish position will have a more constructive character in the given context,” Russian presidential aide Yuri Ushakov said.

Ankara and Moscow ended seven months of strained relations in late June when Erdogan wrote a letter to Putin, apologizing for the downing of a Russian Su-24 attack aircraft by a Turkish jet in November 2015 over Syria and extending his condolences to the family of the pilot killed in the incident.

“Due to the polar positions of the countries, the crisis lasted for 7 month until finally they came to the decision to normalize relations. Both countries need each other, after all. Russia plays crucial role in the Turkish energy sector. Russia provides 55 percent of the gas for Turkish industry. Turkish companies have been active in the Russian construction sector since the 1980s. They have invested more than 60 billion in the Russian housing construction market. Besides, Russia is a huge market for Turkish textile products and petrochemicals,” the expert said.

Thus, during the upcoming meeting, the countries intend to discuss such subjects as the Syrian crisis, the normalization of Russian-Turkish relations, Ankara’s payment of compensation to the family of the slain Russian pilot, as well as economic cooperation. The parties may also discuss the Turkish Stream project, the implementation of which was suspended because of the crisis in relations between the two countries.

https://sputniknews.com

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Supporting TAPI, S Arabia tries to decrease Iran’s regional role: Expert

The long-awaited mega gas pipeline project of Turk­menistan, Afghanis­tan, Pakis­tan and India (TAPI) connecting the energy-rich Central Asian nation with the South Asian countries was inaugurated couple of days ago, with leaders of the four countries attending its groundbreaking ceremony in Serhetabat followed by another in Herat.

Considering the facts on the ground including political differences of the involved countries in the project and also insecurity and instability in the region many experts believe the successful realization of the project will depend on the ability of the project participants to maneuver through among others geopolitical, financial and technical challenges.

To discuss the issue, we reached out to Omid Shokri Kalehsar, Senior Energy Security Analyst in Washington.

 

Following is the full text of interview with him:

 

Considering the differences between India and Pakistan and instability and insecurity in Afghanistan and Pakistan, how successful do you see the future of this project?

 

The 1,814-kilometer gas pipeline will pass through Afghanistan to Pakistan and India. At least 816 kilometers of the pipeline will pass through the territory of Afghanistan. Transport or transit security is an important part of pipeline project beside of security of supply and demand security, financial guarantee and financial sources are another key factors in any pipeline project.

 

The Turkmen economy has been fueled primarily by natural gas. Turkmenistan holds 32 trillion cubic meters of natural gas, the world’s fourth-largest reserves. With a small domestic market, Turkmenistan has been able to export the majority of what it produces. With regard to increasing energy demand in India, this country needs diversify energy supply, gas resources in Central Asia especially in Turkmenistan would be one of these resources. This project also would be beneficial for both Pakistan as consumer and transit country and for India as importer. There is a political tension in India and Pakistan relations and maybe TAPI would have positive effect of regional cooperation, stability and security. TAPI may be key factor in India- Pakistan relations to decrease tensions and develop bilateral relations. TAPI natural gas pipeline -which aims to connect Central Asian energy to South Asian consumers -each involve a high degree of intra-regional cooperation. Pakistan will gain transit fee from this project and also will consume natural gas imported by it.

 

 

How can this project affect the economy and security of the region particularly Afghanistan?

 

According to contract, Afghanistan will import gas via this project to meet it domestic demand and will gain $400000 to $500000 annually transit fee. This will help Afghanistan to gain more and partly recover its damaged economy. TAPI project will help Afghanistan to be an actor in regional energy market. The pipeline will pass through the provinces of Herat, Farah, Nimroz, Helmand and Kandahar. Taliban control these provinces. In statement which Taliban sent to local media, this group declared that they will not allow any group or state to disrupt this project. As Taliban controls this region, security threats against TAPI project in this part of Afghanistan will decrease and security concern will down.

 

Why does Saudi Arabia support the project?

 

These countries hold major oil reserves in the region and are trying to play an important role in OPEC and world energy market as well. Current tensions in bilateral relation forced countries to use any means to decrease counterpart role in regional security stability.  Saudi Arabia has expressed support for the TAPI transnational gas pipeline. Saudi’s financial support for TAPI would help Pakistan not to need Iranian gas. And it means that Iran will lose Pakistan natural gas market if TAPI materialize project. Last decade India was interested to buy Iran natural gas via Peace Pipeline, but due to US pressure this project did not materialize. It seems that when TAPI comes to online, India no more will be interested to Iran natural gas.  Pakistan and Afghanistan are Iran electricity buyer, during inaugural ceremony Pakistan and Turkmenistan agreed to export electricity from Turkmenistan to Pakistan and maybe in near future if this electricity export project materialize, Pakistan decrease electricity volume which imported from Iran.

 

What are the challenges and opportunities of the project for Iran?

 

Iran has plans to export natural gas to its neighbors, according to Iran 20 years development plan, Iran has to increase its share from world natural gas to %10. Iran signed agreement with Pakistan, Oman, and Iraq to export gas. At present only Iran-Iraq pipeline near to officially open. Pakistan is planning to import more LNG from Qatar, and last week Russian giant Gazprom announced that it  is considering the potential of delivering liquefied natural gas (LNG) supplies to Pakistan by October 2017, Pakistan and Russia signed an intergovernmental cooperation agreement for the delivery of liquefied natural gas in October last year. Pakistan currently has two LNG import terminals in operation in Karachi, however, with a total capacity of around 9.5 mtpa, a significant supply shortfall of 19 million tons of LNG per annum is still expected. It seems that if TAPI will be successful and Pakistan import more LNG from Qatar and Russia there is no more need for Iran natural gas and Iran-Pakistan pipeline.

 

How do you evaluate Iran’s energy diplomacy?

 

Energy diplomacy is a reaction to geopolitical threats and limits. In other words, using diplomatic mobility, economic planning, developing technical capacities and using economic resources to provide all conditions required for activating energy diplomacy. Iran’s share in the world energy market is insignificant. Iran could play a more active role in the world energy market, and mobility in production, export, marketing, exploration and extraction in the energy sector could create a special position for every country. Iran must be more active in foreign diplomacy to eliminate problems with its neighbors.

 

Interview by Payman Yazdani

https://en.mehrnews.com/

 

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As Iran licks its wounds post Trump snap, concerns grow further afield in India, Pakistan

US President Donald Trump’s decision to exit the Iran nuclear deal may have pleased most in the Gulf region but it is beginning to have an impact further afield – more precisely in India and to some extent in Pakistan.

India has had delicate energy equations with most energy suppliers in the region and this latest turn of events has only made it difficult. India’s Energy Minister Dharmendra Pradhan, during his visit to the UAE earlier this week, played down the crisis and hinted at a wait-and-watch approach.

Analysts, however, have been expressing concerns over the turn of events suggesting India will have to re-assess its energy policy. For most such observers the trouble starts with energy security but extends to rapidly changing geo-politics.

Lt. Gen. KJ Singh (Retd.), strategic analyst and India’s Former Western Army Commander, emphasizes that besides being an essential contributor to India’s energy security Iran is “also a gateway to Central Asia”.

“In the long run we have abiding interests in relationship with Iran. In medium term, we need to push Chabhar [port] project and in immediate, we have concerns on pricing of crude and gas. Difficult time for us indeed,” Lt. Gen. Singh says.

Limiting options

Dr. Mahendra Gaur, Director of New Delhi-based Foreign Policy Research Center, says Trump’s move has serious implications for India as higher price for oil will limit the country’s options. He adds another dimension to India-Gulf relationship that neither side can afford to lose sight of.

“Tension in the region would adversely impact the welfare and safety of Indian expatriates in West Asia and even a sharp decline in the remittances is not ruled out. More importantly, according to Dr. Gaur, “an impending hike in oil prices due to restricted market would hurt Indian economy.”

He also concedes that India may not find it easy to continue with Iran’s Chabahar port project, which may “dash her quest to link with Central Asia”. Clearly, the move meant to curb Iran’s ambitions appears to be having a cascading effect beyond the region.

Shahriar Hendi, Director at Canada’s Royal United Services Institute, says in the long run, new US sanctions on Iran would drastically limit Iranian oil exports to India. “The previous set of sanctions dropped Iran from the 3rd largest to the 7th oil supplier to India, while lifting of those sanctions enabled Iran to return to her 3rd position,” he says.

Supply-side worries

For Ketaki Sharma, Founder & CEO of Algorithm Research, the collapse of the Iran deal has led to a spike in global crude oil prices due to supply-side worries. “For India, as a net oil importer with twin deficit – current and the fiscal deficit – this has adverse macroeconomic implications,” she says.

Sharma explains that more expensive oil imports will fuel inflation, making Indian goods less competitive in the short run and shrinking corporate margins; thus impeding overall growth. However, beyond these broader macroeconomic implications, she also expects some strategic moves to mitigate risks.

“In the last round of sanctions on Iran, India had negotiated its Iranian crude oil purchase in Indian Rupees (INR). We expect to see this happening this time around as well – a positive move for the INR,” she says. Since the last oil price surge, India has also upped its game on energy security, using the period of cheaper crude oil enter long-term supply contracts with the UAE.

According to Sharma, in this backdrop, the current spike in oil prices will likely be less adverse in macroeconomic terms vis-à-vis that in the last cycle of higher oil prices. “Overall, the macroeconomic pain points will likely remain a cause for concern but perhaps to a lesser degree this time around,” she says.

Mihir Kapadia, CEO and Founder of Sun Global Investments, believes oil markets have been restrained as Iran sanctions remain unclear. “Oil markets are expected to be slightly bearish until further clarity emerges over how Iran’s major oil and consumers react to the sanctions,” he says.

Kapadia also cites the example of the pre-JCPOA period when Iran sold its crude and gas in Indian rupee denominated transactions to circumvent the US sanctions, which would arise if the US dollar is used. “Should other countries personalize their transactions as well, oil markets will find it tough to be bullish,” he says.

Rupee-rial settlements

Despite the raised eyebrows, this isn’t an entirely new situation for India. Even while sanctions were imposed on Iran till a few years back, India continued to export agro commodities through rupee-rial settlements.

Yet, according to Rahul Mazumdar, Chief Manager: Research and Analysis, at Export-Import Bank of India, oil remains an important constituent of India’s trade relationship with Iran. “India though have been astute to diversify its crude import base from across the globe, the northward movement of Brent price will be a cause of concern if supplies are restricted,” he says.

Mazumdar also stresses on the bigger picture of India’s geo-strategic interest in Iran. “Post lifting of sanctions India has committed toward building the Chhabhar Port and a railway line in Iran, which would provide India direct access to Afghanistan, and Central Asia,” he says.

For Mazumdar, these projects are of immense importance given increasing Chinese influence at the Gwadar port in Pakistan, which is less than 100 kms away from Chabhar. According to him, India will wait and watch for the time being, especially given the fact that the European counterparts, including China, at JCPOA have not been in favor of the US decision.

Iran-Pakistan natural gas pipeline

Washington-based senior energy security analyst, Omid Shokri Kalehsar, says regionalism has been at the core of Iran’s policy in its relation with neighbors, and energy was its leverage. If Shokri is to be believed, this arrangement is set to go off-balance.

“Iran has some energy projects with India and Pakistan. But it seems that after US withdrawal from nuclear deal, energy projects will face serious problems related to financial resources, and technology,” says Shokri.

Shokri cites the example of Iran-Pakistan Natural Gas pipeline project, which began in March 2013. “The 2,700-kilometer-long pipeline is meant to deliver gas from the Assalouyeh Energy Zone in south western Iran to Pakistan. Pakistan needs foreign investment to realize this project and is looking to get financial resource form China to complete required infrastructure in its territory,” he says.

According to Shokri, these changed circumstances will impact Pakistan as much as India. “Last month CEO of Russian firm Gazprom said that this company is considering selling LNG to Pakistan. However, after the collapse of nuclear deal, Pakistan may concentrate on TAPI project and more LNG supplies from Qatar and may be from Russia,” he says.

While energy consumers scramble to ensure supplies to keep things running, the long-term impact of Trump’s withdrawal from Iran’s nuclear deal will keep the wider region on the edge.

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Russia’s Lukoil is One of the Favorites for Iran Oil Field Development

The head of Lukoil, Russia’s oil-producing giant, Vagit Alekperov said he expects to sign contracts with Iran to develop the country’s oil fields in 3-4 months. These are the oil fields of Mansuri and Shanguleh, the development of which the National Iranian Oil Company (NIOC) announced a tender in the summer of 2017.

Lukoil has presented Iran with its plan for the development of the Mansuri project. But on par with that Iran is also taking into consideration the plan submitted by the Indonesian firm Pertamina, which has also applied for the tender to develop this field.

What are the chances of Lukoil winning the tender? What will these contracts be like: unilateral or with the creation of consortium, and what benefit could the Russian oil giant receive from these projects? Sputnik discussed the issue with Omid Shukri Kalehsar, an Iranian independent expert on energy security from Washington.

According to his estimates, Lukoil is the favorite to win the tender, but the potential threat of the breakdown of all oil contracts is coming from the possibility of US withdrawal from the Iran nuclear deal.

“Last August, Lukoil presented Iran with a project to develop the Mansuri oil field with the goal that in March 2018 the parties would sign the final version of the agreement,” Kalehsar explained.

According to the expert, during the meeting, Alekperov expressed interest in the development of the Iranian energy sector and noted the priority of investments in the development of oil fields in the country. Given the total volumes of Iranian oil, Alekperov said that the company would not be able to work on all Iranian oil fields, only concentrating on two of them — the Mansuri and the Abe Teimur fields. Both oil fields are located in Khuzestan province in west-central Iran.According to preliminary calculations, the minimum amount of oil in the Abe Teimur field is 15 billion barrels. One-day production from the Bangestan oil well amounts to 60,000 barrels.

“Iran is expected to find many foreign investors for the development of its oil and gas fields. At present, contracts have been signed for the development of the 11th phase of South Pars (The South Pars gas field is the largest in the world, with reserves of 14 trillion cubic meters of gas and 18 billion barrels of gas condensate, which is 8% of the world’s total reserves) with France’s Total and China’s CNPC, as well as a contract for the re-development of the Aban and Paydare Qarb oil fields with the Russian company Zarubezhneft. If a contract is signed to develop the Mansuri and Abe Teimur fields, it will be the first serious contract with foreign companies this year,” Kalehsar said.

According to Kalehsar, Iran needs foreign investment to search and increase the production potential of its oil and gas fields, since the production capacity of Iranian oil wells annually falls by 8%.“Russian companies are actively working in Iraq’s energy industry. Gazprom is seeking to expand its presence in the Mediterranean region and invest in the oil and gas industry of this region, take part in gas production and transportation in this region,” according to the expert.

The Iranian National Oil Company has reported that after taking into consideration the previously submitted proposals for the development of two of its fields, it has been decided to accept the Indonesian firm Pertamina’s proposal. Although no official reports have been received from Iran’s Ministry of Petroleum the Indonesian company recently reported that it had been provided with 80% of the package for the development of the Mansuri field, while the remaining 20% belongs to the Iranian side, accordingly, Lukoil will not participate in the development of this field.

As for the Shanguleh field, Lukoil’s role is still unknown. In addition, according to the expert, in the event of the US withdrawing from the JCPOA, the issue of the development of the Bangestan oil well will arise. If the events develop this way, the Indonesian company will have to decide whether to continue its activities in Iran under American sanctions or to abandon their interests in Iran in favor of promoting cooperation with the US energy sector.“If the US does not withdraw from the JCPOA, and the possibility of their withdrawal has recently increased significantly due to the changing situation in the country, and unless new sanctions are introduced against Iran’s energy sector and those who want to invest in it, the role of Russian companies in various areas of the oil and gas sector may increase,” Kalehsar noted.

“Do not forget that during the sanctions, Russian companies left the oil and gas industry of Iran. If Russian companies have projects with US companies in the US or joint projects with this country, we need to see to what extent they will oppose pressure and sanctions against Iran, and whether they will prefer their interests in Iran’s industry to US markets.

The impact of US sanctions on Iran’s energy sector, as well as on the participation of Russian or Chinese companies in this sector will be known in the near future,” Kalehsar concluded.

ref: https://sputniknews.com/business/201804111063420808-russia-lukoil-oil-field-iran/

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China, Iran seek new agreement on oil, gas sector, expert says

By Sara Rajabova

Iran’s traditional and major trade partner China is determined to further strengthen the relations with the Islamic Republic.

The removal of sanctions have enabled Beijing, which did not cease the cooperation with the Islamic Republic during sanctions-period, to expand economic cooperation, especially in the field of investment and providing financial resources.

With an aim to get more benefits from cooperation with Iran, Chinese President Xi Jinping is going to pay an official visit to Tehran, which is the first visit of Chinese president to the Islamic Republic in 14 years.

The Chinese president reportedly will arrive in Iran heading a big delegation of political and economic representatives.

Prior to his Tehran visit, Chinese leader Xi Jinping has called for strengthening political, trade and cultural ties with Iran through an op-ed published on IRNA news agency.

Speaking about trade ties between Iran and China, he said over the past six years Beijing has been Tehran’s major trade partner. China and Iran have developed a broad and deep partnership centered on China’s energy needs and Iran’s abundant resources as well as significant non-energy economic ties.

In 2011, approximately 10 percent of China’s oil imports were from Iran. Approximately 80 percent of China’s total imports from Iran are oil and the rest is mineral and chemical products.

Iran exported 17.56 million tons of non-oil goods, worth $5.33 billion to China during the first eight months of 2015, according to Iranian Customs Administration. China was the main importer of Iranian goods in the mentioned period. Beijing’s imports accounted for 22.7 percent of Iran’s total non-oil exports in terms of value and 33.3 percent in terms of volume.

Omid Shokri Kalehsar, an energy analyst and PhD candidate in international relations at Turkey’s Yalova University, said Iran and China has historical relations, and after Islamic Revolution both countries was interested to develop bilateral relations.

“China and other countries are interested to invest in Iran’s energy and industry sectors. Chinnese firms have a good potential in energy sector and are ready to come back to Iranian energy sector and invest in it. China is Iran’s first business and trade partner and both counties enjoy a potential to increase trade volume in coming years,” the expert told AzerNews.

He voiced assurance that during Xi’s Tehran visit both countries will seek to discuss new agreement especially in oil and gas sector.

“Iran expects Chinese companies to be more active in the country and invest in its major projects. Iran is interested to attract about $30 billion investments from Chinese companies. In the first six months of 2014, China’s oil imports from Iran increased 48 percent from the same period the previous year. That pace slowed over the rest of 2014, but the year as a whole still registered a 28 percent increase in oil imports from Iran,” Shokri said.

He believes that energy will be backbone of Iran–China relations in post-sanctions era.

Shokri added that China is keen to convince Iran in joining the Shanghai Cooperation Organization.

“That regional grouping is currently devoted to fighting the “three evils” of separatism, terrorism, and religious extremism but it has grown economic aspects as well. China is also moving to integrate Iran into its own multilateral institutions. Iran has been officially acceptedas a founding member of China-founded Asian Infrastructure Investment Bank, which is another small step toward normalizing Iran’s interactions with the global community,” the expert underlined.

As, over the past several years, China became Iran’s number one oil customer and trading partner, Iran is now seeking China’s help in the technological know-how to develop its energy resources.

Shokri said after the lifting of the sanctions Iran is planning to export more oil to world oil market.

“Before sanctions, China firms had played key role in some Iranian oil and gas fields, as well as in Iran’s LNG sector. By December 2008, China’s Sinopec signed a 25-year agreement with NIOC for developing of Yadavaran oil field and according agreement Sinopec has to invest $1.76 in this field with an aim of increasing oil capacity. By 2009, China national oil company made agreement with Iran over developing South Azadeghan oil field. By June 2009, another important agreement was signed between Iran and China’s companies over phase 11 of South Pars field. China National Oil Company with Petronas and Iranian National Oil Company agreed to invest about $4.5 billion in this phase with an aim of producing 1.75 bcm daily form this phase,” the expert said.

He went on to say that this phase is very important for Iran and after coming to stream Iran will able to produce more oil and gas from South Pars fild.

“China’s CNPCI has also signed agreement to invest in Iran’s LNG project. Iran has a plan to produce about 75 million ton annually and has five LNG production facilities project. China’s firms have delayed the completion of oil and gas projects. Iran was not satisfied with such delays. China’s delays in completing oil and gas projects cost about $ 40 billion for the Iranian economy.

Shokri believes that China also seeks to play mediator role between Iran and Saudi Arabia and help these countries to solve the problems.

“China is importing oil from both countries and good relations between Iran and Saudi Arabia would help to keep peace in the region and whereas China’s oil imports from the region can contribute the stability in the region. Stability and peace in the region is very important for China’s energy security,” he said.

Beyond its oil resources, Iran also plays an important role in China’s regional economic ambitions.

Since 2013, China has pushed to expand its overland trade routes through the Silk Road Economic Belt, an initiative to build roads, railroads, and other transportation infrastructure throughout Central Asia. Iran is a critical part of this plan, due to its strategic location with access to key waterways.

Prior to his Tehran visit, Xi called for expansion of ties on transport sector and said Iran and China both are considered to be significant destinations that are located along the Silk Road.

Earlier in 2015, Iranian media reported that Tehran plans to participate in an ambitious Chinese plan to revive the Silk Road aiming to connect Asia to Europe and Africa through a network of roads, railways, ports and airports.

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Doha meeting to have short-term effect on oil prices, expert says

By Aynur Karimova

Decreasing oil prices push the oil producing countries to find out solution to this global problem together.

The recent agreement between some OPEC and non-OPEC countries to freeze the oil production was regarded as a joint response to save their low-oil-hit economies. Experts believe that a freeze in production from January’s near-record levels would do little to relieve the glut.

Energy ministers of Russia, Saudi Arabia, Venezuela and Qatar agreed on February 16 to freeze the production of oil after the negotiations in Doha. Oil output will be stabilized at the level of January 11, if other major exporters follow the suit.

Omid Shokri Kalehsar, an energy analyst, told Azernews that such a meeting will have a short-term effect on oil prices.

“I don’t think such a meeting will have more effect on oil prices, because in Doha meeting four countries agreed on freezing oil production, but in a condition that other OPEC members and non-members has to freeze oil production. Some OPEC members are planning to increase oil production capacities and it would have a negative effect on oil prices,” he said.

The expert believes that if all OPEC members and non-members such as Russia freeze oil production one can expect increase in oil prices in a mid-term.

“But it is reality that oil market has about 250,000-300,000 barrels per day oversupply,” he noted. “Oil producing countries have to make a decision to decrease oversupply capacity and after such a decision we can be hopeful about oil prices’ future.”

After Russia and Saudi Arabia agreed to freeze oil production at the January 2016 level, Kuwait and the UAE also joined this deal. Commenting on the possibility of joining of new countries to this deal, Kalehsar said these countries have joined this deal but with a condition that other OPEC members and non-members will also make such a decision.

“Joining of other OPEC members to this deal is possible, but all members and non-members have to decrease oil production and export capacity,” he added.

Being free of international sanctions, energy-rich Iran, the fourth country in the world for its proven oil reserves of 158 billion barrels is keen to return to the oil market and regain its previous position as a huge oil supplier.

However, in January 2016, after Iran voiced its intention to increase exports by 500,000 barrels per day, global oil prices pushed below $28 per barrel.

Meanwhile, oil prices rose by more than 5 percent to climb above $34 a barrel on February 17 after Iran voiced its support for freezing production to boost prices, Reuters reported.

Iranian Oil Minister Bijan Namdar Zangeneh, after a meeting with his counterparts from Venezuela, Iraq and Qatar in Tehran for over two hours, said the Islamic Republic welcomed the initiative to set a “ceiling” as a first step toward stabilizing the market.

The minister, however, did not explicitly say that Iran would keep its own output at January’s levels.

Kalehsar believes that Iran‘s decision to return to the oil market after lifting of international sanctions and to recover its oil production capacity to the 2005 level – 4.5 million barrels per day – will lead to drop of oil prices.

ref: https://www.azernews.az/news.php?news_id=93111&cat=analysis

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