Turkey to Continue Iran Gas Exports Despite US Sanctions

TEHRAN, Sep. 16 (MNA) – Omid Shokri Kalehsar, a senior energy security analyst, told Mehr News that Turkey will continue to import natural gas from Iran despite US’ sanctions targeting Iran’s oil sector.

Omid Shokri Kalehsar, a senior energy security analyst and PhD candidate in international relations, said in an exclusive interview with Mehr News Agency that Turkey is keen on buying natural gas from Iran with “reasonable price” in contrast to the price it pays for the gas imported from Russia and Azerbaijan.

He stressed that if Iran and Turkey can agree on a price and Iran is able to produce more natural gas, Turkey will be interested to consider buying gas from Iran instead of the other two rivals.

He went on to add, however, that while Turkey’s private companies have enough financial resources to attract Iran’s market, a legal framework, an efficient decision-making process, and political stability are also needed to make attracting foreign investment possible.

The following is the text of his interview with Mehr News:

Back in 2015, Iran had voiced willingness to pipe its natural gas to Europe through Turkey. Did that plan ever come to anything? And is the project still feasible after the US withdrawal from the Iran nuclear deal and the reinstatement of economic sanctions on Tehran?

Iranian officials many times showed their interest to export natural gas to EU and play a role in EU energy security. Iran holds world’s second natural gas reserve but at present has no major natural gas export. It should be noted that Iran has high domestic natural gas consumption and suffers lack of foreign investment and technology and capital capacities due to sanctions. Iran just exports annually 10 bcm to Turkey. Major natural gas export needs more foreign investment, financial resources and decrease in domestic consumption.

In coming years there is no more demand in EU natural gas  market. At present EU members states’ LNG imports from US and Russia plays a key role in EU natural gas market and is planning to export more natural gas to EU via new pipeline projects such as Turk Stream and Nord Stream 2. EU members also made more investment in renewable energy and energy efficiency.

Iran needs about 4-6$ billion to construct required infrastructure to deliver natural gas to Turkey borders. And at present Iran has no more capital capacities. And current natural gas price is not economical for Iran to export natural gas to EU via pipeline.

Ankara has pledged to boost imports of Iranian gas despite US sanctions. Is that request still on the table?

US sanctions targeted Iran oil sector and Turkey will continue natural gas import from Iran. Turkey has some domestic pipelines project and at present natural gas system is not integrated, Turkey needs Iran natural gas to use it in Southern part of Turkey which has cold winters. Ankara is interested in importing more natural gas from Iran. Turkey begins to import natural gas from Azerbaijan via TANAP project and by next year Turkey will import natural gas from Russia through Turk Stream project. By 2026 and at the end of Iran-Turkey natural gas agreement, Turkey is interested in importing more natural gas from Iran and extend the natural gas agreement with Iran. Turkey’s officials have repeatedly stated that they want to buy natural gas from Iran with reasonable price in contrast to the gas price which Turkey imports from Russia and Azerbaijan. If Iran and Turkey agree on price and Iran is able to produce more natural gas, Turkey will import more natural gas from Iran. It should be noted that more natural gas production needs more investment in oil and gas fields and requires infrastructure and giving priority to energy efficiency in Iran. Turkey told US officials that it will continue importing oil and gas from Iran but during last month Turkey decreased oil import from Iran.

Turkey has stressed that it does not approve of US sanctions against Iran, calling them ‘unilateral’. Meanwhile, Turkish energy company Unit International has a strong presence in Iran, with a $4.2 billion worth of contract with Iran’s energy ministry to build seven natural gas power plants here. How much progress has the company achieved with the project so far? Has Unit International decided to remain in Iran or abandon its investment projects under US pressure?

Post-JCPOA Iran expected to have more foreign investment in its energy sector.  Unit International was one of the foreign firms which signed an agreement with Iran to build seven natural gas power plants. According the agreement, Iran will provide the natural gas which Unit International need for these power plants. Iran has also pledged to guarantee purchase generated electricity from these power plants at a predetermined agreed price over a period of 6 years.

By September 2018, there was no major development in this agreement. There were challenges and debates between government and parliament over this agreement.  Asadollah Gharakhani, spokesman of Iranian Parliament Commission on Energy announced that in attraction of foreign investors for energy sector, government policy should include transferring of knowledge and technology, and also human resource training. He refers to the fact that Unit International has no history of construction of power plants and this company was not considered a power plant manufacturer, he claims that Unit International in Turkey occasionally organizes hotels and business activities.

US withdrawal from JCPOA is a major problem for any foreign company interested in investing in Iran energy sector. It is expected that Unit International needs Turkish government’s strong support to keep investing in Iran and to continue construction of natural gas power plants. I think it will not be easy for Unit International to maintain in Iran. The other problem in both Iran government and parliament is the support to this company and other foreign firms to be more active in Iran energy sector. Turkey’s private companies have good experience and enough financial resources to attract the Iran market. The problem is that to attract foreign investment you need a legal framework, an efficient and fast decision process and political stability (especially in the international context). At the moment these variables are far from being achieved.

Omid Shokri Kalehsar is a senior energy security analyst and PhD candidate in International Relations. His primary research interest is in the area of energy diplomacy, geopolitics of energy, Iran–Russia relations and Iran-Turkey relations.

Interview by: Payman Yazdani, Marjohn Sheikhi

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Energy is a Backbone of Azerbaijan-Turkey Relations

Europe is a constant hunger for oil and gas despite the development of the alternative energy resources. In this regard Azerbaijan takes an important role for Europe. Baku-Tbilisi-Kars is a chain that will unite East to the West. Energy consultant Omid Shokri Kalehsar commented Eurasia Diary’s questions on the Azerbaijan-Turkey relations and Baku-Tbilisi-Kars railways project.

 

– Yesterday the President of Azerbaijan arrived to Turkey. What are the objectives of the visit?

 

– Azerbaijan–Turkey relations have always been strong with the two often being described as “one nation with two states” slogan. Erdogan attended in opening cermony of  Baku- Tbilisi- Kars Railway project.the project designed to be a new corridor that will connect Azerbaijan, Georgian and Turkish railways.  The project implementation began in 2007 and construction began in 2008 and it foresees the rehabilitation and reconstruction of 178 km-long railway .This project will effectively open a new rail-only corridor from the Caspian Sea to Europe via Turkey, eventually excluding the need for sea transportation once the planned rail tunnel under the Bosporus Strait in Istanbul is complete.

 

The Baku-Tbilisi-Kars project could also open a North-South rail corridor linking Russia to Turkey. This line will transport both freight and passengers and is expected to provide an alternative freight transport route to routes that transit through Iran. Energy play key role in Turkey-Azerbaijan relation and it can be describe of backbone of their relations. Both countries are interested to play important role for transporting goods from region to the consume market and in this regard Baku- Tbilisi- Kars Railway project hold a potenail to help these counteris to gain political and economic benefits.

 

Durign Erdogan trip to Baku,both president express there willing  to develop bilateral relations, increase trade volume and mainly there plan to begin using TANAP project soon. Erdogan in his last visit to Baku has expressed his country’s support to Azerbaijan’s  position on Nagorno-Karabakh.He  said that Turkey and Azerbaijan have a unanimous stance on the Armenian-Azerbaijani conflict. According Erdogan: “We speak the same language and act from the same positions”.

 

Erdogan’s remark came in response to the reports that Azerbaijan’s wishes to see Baku in the OSCE Minsk Group mission (which mediates peace between the conflicting parties).

 

 

– What role will Azerbaijan and Turkey play in the supply of energy resources to Europe?

 

– Azerbaijan began to present itself as a key ally in the European energy market, partly by retaining an interest in having a potential role in the Southern Gas Corridor. Many international transport routes, including the Baku-Tbilisi-Ceyhan, Baku-Supsa, Baku-Novorossiysk oil pipelines and Baku-Tbilisi-Erzurum, Azerbaijan-Georgia, Azerbaijan-Iran and Azerbaijan-Russia gas pipelines originate namely from Azerbaijan.It is believed that TANAP, which will later be linked to TAP. The Southern Gas Corridor project envisages the transportation of the gas extracted at the giant Shah Deniz field in the Azerbaijani section of the Caspian Sea. Gas deliveries to Europe are expected just over a year after the first gas is produced offshore in Azerbaijan.The Southern Gas Corridor pipeline system has been designed to be scalable to twice its initial capacity to accommodate additional gas supplies in the future. Shah Deniz 2 gas will make a 3,500 kilometer journey from the Caspian Sea into Europe. The existing South Caucasus Pipeline will be expanded with a new parallel pipeline across Azerbaijan and Georgia, while the Trans-Anatolian pipeline will transport Shah Deniz gas across Turkey to join the Trans-Adriatic Pipeline, which will take gas through Greece and Albania into Italy.The first gas supplies through the corridor to Georgia and Turkey are given a target date of late 2018.

 

 

 

According to the Strategic Plan of the Turkish Ministry of Energy and Natural Resources (2015-2019), diversification of energy resources is a top priority. Turkey is interested in using its geographic position in the region to become an energy transit country and regional hub for oil and gas from the Caspian Basin, Central Asia, and Iran, to European markets. Turkey is interested in using its geographical position to play a key role in the energy market.

 

Turkey needs more investment in infrastructure to increase the capacity of its refineries and natural gas storage facilities. It could be argued that energy would help Turkey to improve its relations with the EU and enhance its candidacy status. Both sides could use the increased energy and diversification of energy resources to strengthen beneficial relations and gain mutual advantage from an energy agreement. That said, many of these plans are still in the early stages of development, and it will take years for them to come to fruition. However, in the meantime it remains to be seen what advances will be made in the short term, and how quickly Turkey’s ambitions as a transit country materialise.

 

– I would like to hear your opinion on the Nagorno-Karabakh conflict. The other day Ilham Aliyev and Serzh Sargsyan met. But Sargsyan does not want to return Azerbaijani territories. What can you say about this? 

 

– In Nagorno-Karabakh conflict Minsk group has play key role but during its history we can see a little progress in its attempting to solve Nagorno-Karabakh problem. Recent meeting betwen  tow preseident has no clear effects on future this conflict.The meeting, which takes place on the initiative of the Organization for Security and Europe (OSCE) Minsk Group, will come more than a year after the leaders of the two nations last met. Minsk groups espicaly Russia hold a potentail to solve Nagorno-Karabakh conflict and is able to pressure both parties to be more active in negation process with aim of solving Nagorno-Karabakh conflict.

http://ednews.net/en/news/analytical-wing/206247-energy-is-a-backbone-of-azerbaijan-turkey-relations

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Iran to Sell Russia 1.5 Mln Barrels of Oil in Exchange for Technology, Services

Iran plans to start selling 100,000 barrels of oil a day to Russia within the next 15 days, Iranian Student New Agency (ISNA) wrote, citing the country’s Oil Minister Bijan Zanganeh.

Briefing the media after a meeting with his Russian counterpart Alexander Novak in Tehran, Zanganeh said that Iran would receive payment half in cash and half in goods and services.
“We are looking for long-term trade relations with Russia to minimize the effect of fluctuations created by the West,” Bijan Zanganeh added.

In an interview with Sputnik Persian, independent Iranian analyst Omid Shokri Kalehsar said that while the Western countries took their time waiting for US President Donald Trump’s actions regarding Tehran, Russia has become the first buyer of Iranian oil since the partial lifting of sanctions agreed in 2015.

“In 2011 and 2012 the EU imposed a ban on the import of Iranian oil over Tehran’s nuclear program. Meanwhile, there were media reports about a “barter oil deal” being discussed by Russia and Iran whereby Iran would supply a daily 500,000 barrels of oil to Russia in exchange Russian technology, equipment and services,” Omid Shokri Kalehsar said.

“However, after Iran and the P5+1 signed a nuclear agreement  paving the way for lifting the sanctions from Tehran, the “barter agreement” was no longer need,” he added.

Still, the agreement on the planned supply to100, 000 barrels of Iranian oil to Russia reflects the two countries’ desire to expand their energy cooperation.

“Russia’s Lukoil and Gazprom companies are ready to invest into the Iranian oil and gas sector, which needs some $150 billion dollars’ worth of investments. This would help Iran to extract more hydrocarbons thus cementing its position in the global energy market,” Kalehsar noted.

“Lukoil and Gazprom will return to Iran to develop new oil and gas fields there.”

After Iran and the P5+1 group of international negotiators, including Russia, the United Kingdom, China, France, the United States and Germany, signed a comprehensive agreement on Tehran’s nuclear program in Vienna in July 2015, European countries showed interest in Iran’s oil and gas sector, with the election of Donald Trump, they are biding their time waiting for the new US President to outline his position on the 2015 nuclear deal with Tehran.

“Russian companies have none of these concerns though and will be the first to establish themselves in the Iranian oil market, way ahead of their European counterparts,” Omid Shokri Kalehsar said.

A number of Russian companies have already signed memorandums of understanding with Iranian companies.

Earlier this month, Russian Energy Minister Alexander Novak said that Moscow considers it possible to extend its participation in the oil producing states’ agreement on output cuts for another six months, and will decide on the issue in April or May.

The Organization of Petroleum Exporting Countries (OPEC) sealed a deal on November 30, 2016, agreeing to cut its oil output by 1.2 million barrels per day for the first six months of 2017 in an effort to stabilize the oil market and bring oil prices to the healthy range of $50-60 per barrel.

https://sputniknews.com/middleeast/201702241051001397-iran-russia-oil/

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How Iran-US escalation may impact oil market?

Iran, in the post-sanctions era, was expected to attract more foreign capital and technology, especially in energy sector.

Prior to the imposition of sanctions, Iranian officials had, on many occasions, stressed that Iran needs about $200 billion to recover and potentially increase its oil and gas production capacity. Iran has devised a new oil contract entitled Iran Petroleum Contract (IPC) aiming to ease foreign investment in its oil fields.

The majority of oil fields are in the second half of their production and their production capacity is dropping annually to average 8 percent. This is while any attempt at recovering oil fields production capacity requires high technology and foreign investments.

By April 2018, Iran succeeded in signing only two contracts with foreign energy firms to recover and increase its oil and gas production capacity.

One contract was signed with France’s Total and China’s CNP for the development of the 11th phase of South Pars. The other one was signed with the Russian company Zarubezhneft for the re-development of the Aban and Paydare Qarb oil fields.

Iran is also planning to sign agreements with Indonesia’s state-owned Pertamina for Mansouri oil field development. Pertamina is interested in making investments in this field in a bid to produce 60,000 bpd and eyes for possible exports to Indonesia.

For that matter, it is safe to argue that Iran’s priority is to attract foreign technology and capital for development of its oil and gas fields.

However, if the Trump administration decides to withdraw from Iran nuclear deal (JCPOA), Iran will encounter significant challenges in order to attract investments.

Further, if the US decides to impose new or further sanctions on Iran, it is likely that foreign energy firms, whose capital and investments are currently in the US or have mutual projects with American private and federal companies, would shy away from making investments in Iran’s economic and energy sectors.

In 2017 Iran lost its oil market share in Asia to Saudi Arabia, US and Russia in spite of gaining higher share in the EU market. Obtaining higher share in the EU market helps Iran to benefit from “Oil for Investment/Goods” with EU companies even if further sanctions are to be imposed on the country. It already has difficulties to receive its oil revenue.

I believe that Iran is a lucrative target for many foreign private and state energy firms who have sufficient experience and hold enough capital and technology needed to be able to enter the Iranian market.

The real problem, however, is for foreign investments to be made without hindrances. Iran needs a legal framework as well as an efficient and fast decision-making process and, most importantly, political stability in both domestic and international levels.

Iran can use difference-pricing policy to preserve its share in regional and global markets. Accordingly, Iran can offer discounts to major oil costumers, as this policy was pursued during the sanctions period in which India benefited from such discounts.

During the sanctions period, Russia, Iraq and Saudi Arabia captured Iran’s share in global oil market. The quality of Iranian oil is in many respects very similar to Iraqi Kirkuk and Russia Ural crude oil.

The oil industry will be affected by the forthcoming US decisions regarding the future of Iran nuclear deal.

In the post sanctions era Iran increased its oil exports by 1,000,000 bpd. It is thus expected that Iran’s oil export would drop significantly in case of re-imposition of sanctions.

Since supply and demand is the overarching principle ruling the world’s oil market, other major suppliers hold a potential to produce more if Iran or any other country faces a decrease in its production capacity because of sanctions.

In addition, if tensions surface in relations between Iran and other OPEC or non-OPEC producers, they may exploit the situation to raise their production capacity and use it as a viable political leverage against Iran.

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Iran Energy Sector: After Lifting Sanctions

Omid Shokri KALEHSAR

23.01.2016

The P5 + 1 nuclear agreement with Iran and the lifting sanctions on the Iranian energy sector has provided a great opportunity for Iran to recover its oil, natural gas, LNG and production capabilities as well  great opportunity for foreign companies to invest in Iran energy sector. Furthermore, in the near future this will be positive for the Iranian economy as a whole and the oil and gas industry in particular. Bijan Namdar Zangeneh, the Oil Minister who greeted a press conference in April 2015, expressed that Iran was ready for a rapid increase in oil exports after the lifting of sanctions and emphasized that maintaining the share of Iran’s oil sales at OPEC and said the rate would be likely to return to the state it enjoyed before sanctions.

According to the OPEC statics , Iran has oil reserves of 157 billion barrels, or about 13.1 percent of the oil reserves of OPEC, putting Iran at similar level of significance to Venezuela and Saudi Arabia. Despite this important potential in terms of oil reserves, production and export has never been in a capacity to fully seize upon its potential, even if the pre-sanctions rate of barrel production reached 6 million (decreasing to 2.5 million barrels during the sanction period – about one million barrels of exports).

With regard to the nuclear declaration in Switzerland and increasing the possibility of sanctions, some media and analysts to assess the future prospects of oil production began. In the meantime, a number of oil production in Iran is considered a potential high jump and even up to eight million barrels have estimated. But many oil industry officials and activists, these numbers are unrealistic. A month ago, “Rokneddin Javadi” Managing Director of National Iranian Oil Company, the oil production capacity in the drilling industry’s development depends. He said Iran’s oil production capacity is now about four million barrels per day.

The natural gas sector is slightly different. Iran could be an option for Europe to reduce dependency on Russian gas, and this is an issue which Iranian oil officials have repeatedly mentioned. It should be noted that a high consumption of gas in the country in the amount of gas injected into storage tanks and export (to Oman, Iraq and Pakistan) reduces the volume of gas available for export. Another barrier in this area is the lack of necessary infrastructure for gas exports to Europe. Under these conditions it is possible Western countries may not be able to wait as such a process requires at least 10 years.

To improve conditions for its oil and gas sectors Iran needs capital and technology that can be provided by international oil company access. Several informal talks between officials from the Ministry of Petroleum of Iran’s clerical government and representatives of international companies has been done. An example of the talks in September 2013 during the annual meeting of the United Nations and the OPEC summit in Vienna took place the same year. These companies have declared interest in participating in Iran’s oil and gas sector, but not at any cost.

Oil price falling is a serious problem toward Iran return to world oil market, and also oversupply by OPEC member and none-OPEC members.  In natural gas Iran have a chance to play key role in regional gas market. Iran is planning to begin export sag to Iraq, Oman and Pakistan via under construction pipelines. In Long-Term Iran is able to export gas to European market. But Iran’s first priority to complete its first LNG project and export LNG to European market by 2018.  Iran has a potential  to be game changer in world energy market but it required using energy diplomacy and more active foreign policy.

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Iran-Pakistan gas pipeline: intense pressures vs global market

Baku, Azerbaijan, Oct. 4

By Omid Shokri Kalehsar – Trend:

Iran and Pakistan began work on the IP pipeline (aka Peace pipeline) in March 2013. The 2,700 kilometer-long pipeline is meant to deliver gas from the Assalouyeh Energy Zone in southwestern Iran to Pakistan.

Some 2000 km of the pipeline runs through Iran and 700 km through Pakistan. The generated revenue looks to be around $7.5 billion. Iran is planning to export 1.5 million cubic meters (mcm) per day natural gas to the country.

Iran has declared its intention to increase oil production and export capacity on countless occasions. Iran’s Oil Ministry has recently presented a two-fold plan to achieve this; both short- and long-term.

The short-term program first aims to mitigate the effects of sanctions and get the country’s industry and infrastructure back into shape. Iran’s short term plan is to export natural gas to neighbors and in long term to European Market, Pakistan is one of Iran priorities to export gas.

Nothwithsdtanding the mutual agreements and concrete efforts which were supposed to be followed, Pakistan by October 2017 was unable to construct the necessary infrastructure in its own territory, blaming financial issues for the problem.

The problem is further compounded given that Pakistan is also planning to buy LNG from Qatar. During the former Presdinet Barack Obama’s administration, the US asked India to use American technology and financial aid to construct nuclear facilities to generate electricity as a subsitute for import of Iranian natural gas through Peace Pipeline project. Against this background, then, it is clear that the Iran-Pakistan (IP) Project would face intense pressures.

Iran first priorities to export gas to neighbors, at present Iran hold less than 1 percent of world natural gas market and the Islamic Republic is planning to increase its share of natural gas market to 10 percent. If Pakistan wants to import natural gas or LNG form another supplier, Iran will lose Pakistan market.

In recent years, a fall in the cost of LNG has encouraged Pakistan to plan on importing more LNG from Qatar, and also from other suppliers rather than Iran.

Until 2016, Pakistan had no financial resources in its budget to construct the pipeline with Iran. According to the IP agreement, this project is expected to be completed by the end of 2018.

The significance of Iran’s serious presence in the energy equations of the time zone is greater, as we know that the US has made a great effort to remove Iran from the energy equations of the region.

A clear example of this is the US efforts and pressure on India and Pakistan to prevent the implementation of the peace pipeline and replace the pipeline with a pipeline that transports Turkmen gas to India and Pakistan. The US effort to provide Pakistan’s electricity from Tajikistan through the Casa-1000 Electricity Transmission Project is also being evaluated in the same vein.

Saudi Arabia and Qatar, struggling with heavy costs to prevent Iranian gas exchanges with regional countries through pipelines.

Before Qatar crisis, Doha followed a more active policy in terms of exports of more natural gas and LNG to its neighbors.

Iran and Qatar share South Pars Gas Field (the territory of Qatar is called the North Dome), the world’s largest natural gas field.

Qatar exports oil and LNG from South Pars field but Iran was unable to export from this field due to economic sanctions imposed on it for its nuclear program.

Iran, however, hopes that it would produce more natural gas from this field and play key role in the regional and global natural gas markets as a result of lifting sanctions.

It seems that Saudi Arabia is also playing a key role in the delay in the implementation of the IP project, as well as the pressure on the Gulf states to avoid gas exchanges with Iran.

No country is interested to lose its share in the regional and global energy market. Every country tries to maximize its own benefits vis-a-vis other oil and gas exporters and use any means to find new customer and also sell oil and gas to another exporter’s customers.

Omid Shokri Kalehsar is an Iranian energy analyst based in Washington, DC.

ref :https://en.trend.az/iran/business/2805059.html

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