US Wants Europe to Use Qatar Gas Instead of Russian Supplies

The US wants European countries to find other gas suppliers to Russia, with resource-rich Qatar as a possible alternative.

Deputy US Energy Secretary Dan Brouillette told Reuters that Washington was in talks with Doha to supply gas to Europe, and particularly countries that are reliant on Russian gas.

Russian gas accounts for around 60 percent of Berlin’s gas imports, with the Nord Stream 2 pipeline set to double Moscow’s export capacity to Germany.
US President Donald Trump has warned Germany that it would be “captive” to Russia if it relied on it as a gas supplier and urged Berlin to halt work on the Nord Stream 2 pipeline.

The move could see German companies face US sanctions.

Brouillette said he has held talks Qatar’s Minister of State for Energy Affairs Saad al-Kaabi about whether Doha could be an alternative gas supplies to Europe.

“We are talking to Minister Kaabi here about other markets, specifically Europe, to the extent that we can talk to the Qataris about supplying European markets with natural gas,” he said in an interview.
“They are very much interested in that and so are we – it’s very connected to deliberations with others we have around Nord Stream 2.”

He added that Qatar could help diversify the gas market in Europe, particularly with Doha’s investments in LNG export facilities.

“It is good for the national security of Europe. Cheap gas comes at a high price of freedom,” said Brouillette.

Last September, Qatar said it would invest $11.6 billion in Germany over the next five years including in a LNG terminal.

Omid Shokri Kalehsar, a Washington-based senior energy security analyst, told The New Arab that Washington has been encouraging European countries to diversify Russian-dominated energy supplies, with Qatar and the US as possible alternative suppliers.

“It is in the US’ interest allow Qatar to export to specific markets,” said Kalehsar, saying Doha’s supplies play a key role in Washington’s strategy of providing balance in the market.

“Increasing LNG supplies is the best way to reduce [Europe’s] dependency on Russian natural gas…. Qatar is a major LNG provider and is trying to increase its share in the market. Russia is trying to keep its monopoly in Europe – with energy – and has used different pricing strategies to do this.”

Russia has sold a stake of its shares in Rosneft to Qatar, as Doha battles a blockade from a Saudi-led coalition.
Turkey is also boosting its relationship with Russia with the construction of the TurkStream pipelines.

https://www.alaraby.co.uk

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Iran and Saudi Arabia Compete for India’s Energy Market

India now has the highest oil and natural gas consumption in the world and will for the foreseeable future. With exorbitant and ever-increasing energy demands, India is under pressure to diversify its energy supply. Iran and Saudi Arabia are now in a race to meet India’s demand in the international oil and gas market.

 

India is the second largest Asian oil consumer after China. In 2017, India was buying 577,000 barrels per day (bpd) of oil from Iran, accounting for 27 percent of Iran’s total crude oil exports. From January to October 2018, India imported 789,000 bpd of oil from Iran, an increase of 36 percent. Iranian officials have offered significant price discounts to India as a strategy to maintain Iran’s share of India’s oil market, and Iran has insured tankers which transport its oil.

 

Saudi Arabia is one of India’s largest oil suppliers, and the second largest supplier of crude oil and liquefied petroleum gas (LPG). In 2016-17, India’s crude oil imports from Saudi Arabia amounted to 18.5 percent of its total imports or 39.5 million tons out of a total of 214 million. From January to October 2018, India imported 697,000 bpd of oil from Saudi Arabia.From Iran’s perspective, India’s investment in multiple sectors of its own domestic market, especially infrastructure and energy, equates to political insurance. India’s investment in Chabahar port is a case in point.

 

In February 2018, during a visit by Hassan Rouhani to New Delhi, India, Iran signed 15 mutual cooperation documents, the majority of which related to oil and gas fields cooperation. After this visit, it was announced that Iran had eliminated the cost of transporting oil to India for the rest of the fiscal year. The decision was made as a response to India reducing its oil imports from Iran between April 2017 and January 2018. The move marked a success for Iranian policy makers, and it was subsequently stated that India would increase its oil imports from Iran.

 

Saudi Investment in India’s Energy Sector

 

Saudi Arabia plays an active role in energy diplomacy in India. Investment in energy infrastructure is an effective way for Saudi Arabia to infiltrate and influence India’s foreign policy decision-making process. Aramco, the world’s largest oil producer, is looking to invest in foreign refineries to meet demand for oil and increase its share of global markets. This is a strategy that will allow Saudi Arabia to expand its share of Asian markets and essentially leave its rivals in the dust. Saudi Arabia is not only competing with Iran politically but aiming to gain an edge over even-more-productive Iraq to become India’s largest oil importer. Last year, Iraq was India’s largest oil importer.

 

In April 2018, Saudi Aramco and India’s Ratnagiri Refinery & Petrochemicals—a joint venture of Indian Oil Corp (IOC.NS), Hindustan Petroleum Corp (HPCL.NS) and Bharat Petroleum Corp (BPCL.NS)—signed a contract worth $44 billion to build a refinery in the state of Maharashtra in western India. The two sides are contributing 50 percent to this project. Saudi Aramco has said the refinery will have a production capacity of 1,200,000 bpd upon completion. Aramco also said the project would be one of the largest refineries of petrochemicals in the world. According to Saudi Energy Minister, Khalid Al-Falih, refining capacity of 60 million tons of crude oil is said to be Saudi Arabia’s only major investment in India. Aramco is also interested in investing in fuel and petrochemical sales as well as oil reserves in India.

 

Saudi Arabia does have the potential to act on this investment promise. Aramco has shipped three million barrels of crude from three refineries in India, and another Indian refinery is currently negotiating with Saudi officials to sign a contract for one million barrels of oil. Political tensions between Iran and Saudi Arabia, especially over the Yemen crisis, but also enflamed by the US’s withdrawal from the Joint Comprehensive Plan of Action, and new sanctions against the Iranian energy sector, have meant that Saudi Arabia is more than capable of seizing the current momentum in its favor to decrease Iran’s role in regional energy markets, especially that of India.

 

Saudi Investment in TAPI Project

 

Afghanistan, Turkmenistan, Pakistan, and India have recently signed multi-billion-dollar investments in the TAPI gas pipeline project. Saudi Arabia has announced it will invest in the construction of a gas pipeline that will transfer Turkmen gas to Pakistan and India through Afghanistan.

 

With the participation of Saudi Arabia in the TAPI energy transfer project, Riyadh, on the one hand, could draw the US’s support for reducing Russian domination of Central Asian energy resources (through increasing export routes around Russia). On the other hand, with this increase in engagement in the Central Asian energy region, it may be possible for Riyadh to gain concessions in future energy talks, especially in the context of global oil policy, to control the global price of energy carriers.

Security concerns and financial resources pose the main obstacles to realizing the TAPI project, yet Saudi Arabia’s support for the project is merely another instrument to circumvent Iranian power and influence. Saudi Arabia is directly investing in India’s energy infrastructure, as well as offering political and economic support for transportation projects which allow access to the Indian market by side-stepping Iran.

 

For India, the American market is thus more attractive. With the US-imposed sanctions in place, Saudi Arabia is likely to become India’s largest oil supplier. At the same time, however, India will greatly increase its imports from Iraq. Even Nigeria has gained access, so insatiable for fuel is India’s current phase of development. Most oil producing countries have increased their exports to India across the board.

 

As expected, the U.S. has granted waivers to major buyers of Iranian oil in India and allowed them to continue imports beyond the U.S. sanctions deadline. It will not be easy for India to find an alternative to Iranian oil, but it does not mean that in the mid-term or long-term it will be impossible for India to figure out some long-standing arrangement. Saudi Arabia and Iraq are poised to make up the bulk of India’s oil needs. Saudi Arabia is more interested in exporting oil to India in order to weakening Iran’s position in its oil market, with the added bonus of making a dent in the Iranian economy.

 

India and China are interested in establishing an “Oil Buyer’s Club,” to increase their bargaining power and reduce the power of the U.S. oil market by also importing crude from the U.S. China and India had previously proposed to buy Iranian oil in exchange for being paid in Yuan and Rupees.

 

Iran’s main issue (among many) is to be available to attract foreign investment when it does have the chance to bypass sanctions, and this requires an accommodating legal framework, an efficient and fast decision process, and political stability (especially in the international context). These variables are far from being achieved, and the country has a long road ahead.

 

Iran and Saudi Arabia Compete for India’s Energy Market

 

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Qatar’s Withdrawal from OPEC not a Good Sign

 

As Qatar’s withdrawal from OPEC takes effect today, the geopolitics of energy is changing. Each major energy producer is trying to take more shares in the world energy market. Political tensions between major oil and gas producers would affect regional and world energy markets. As the world’s largest exporter of LNG, Qatar gets the most revenue from it.

U.S. sanctions against Iran give an opportunity to Saudi Arabia which can use its producing capacity to produce and export more oil in the region in an attempt to weaken Iran’s position in OPEC.

A high oil price is not good for major oil consumers. The world oil market has been worrying about U.S.’sanctions against Iran.Regional tensions are one of the factors affecting members of the international organization. The tensions between Qatar and Saudi Arabia, which began in June 2017, would prevent Qatar from withdrawing from Saudi Arabia’s shadow even in an organization like OPEC. Qatar with production of 0.6 million bpd is not a major actor among OPEC members.

 

After a sharp rise in the price of crude oil to more than 100 U.S. dollars between 2011 and 2012, the price of crude oil gradually shrank in 2016 and reached a low of less than 40 dollars. The organization was unable to find a solution for the crisis, which had a huge impact on its member states.

Oil producers were able to cut crude prices to 70 dollars a barrel in mid-2018 with a drop in supply. But once again the policy of the largest oil producer Saudi Arabia, along with the White House’s political and economic measures and the gap in the queue of supporters for a reduction in production, led to a sharp drop in crude oil to about 50 dollars.

In a situation where the future of oil demand is not clear in the long run, the market management method and the call for Russia to counterbalance the U.S. are also challenges to OPEC.

South Pars Gas field (North Dome) shared by Iran and Qatar is a major source of Qatar LNG production. It is the largest gas field in the world. Qatar has made it clear that by 2024 it would have used South Pars to produce 110 million tons per year.

At present, Qatar produces 77 million tons per year. Qatar’s withdrawal from OPEC is a good opportunity to increase its production from this shared filed, Iran is unable to attract more foreign technology and financial investment and Qatar’s oil production in South Pars is more than that of Iran.

According to Reuters in November, Australia grabbed the world’s biggest LNG exporter crown from Qatar in November. According to statistics, Australia produced 6.8 million tons of LNG in November, out of which 0.6 million tons were exported from Qatar.

Australia’s LNG exports rose by 19 percent in November compared to October while Qatar’s exports dropped 3 percent in November compared to the previous month, the country’s fourth consecutive decline for the year in exports.

It is not the first time that an OPEC member has withdrawn from the organization. The main point is that OPEC’s decisions are not followed by major oil suppliers and Qatar’s withdrawal is certainly not good for OPEC. As Qatar is not a major oil producer among OPEC members, it cannot cause any major changes in the oil price.

The major factor in the oil market is demand and supply. At present, the oil market is faced with oversupply which leads to a low oil price. Qatar’s withdrawal from OPEC is not a good sign for its future. If OPEC is interested in playing an important role in the world oil market, it needs cooperation and coherence among all members.

If major members continue to be inefficient in OPEC decision-making, there will not be a promising future for the organization. OPEC’s weak position favors major energy consumers. Obviously, OPEC does not have the same influence on oil prices as it used to be. Its strength has slowly weakened due to the growth of producers such as the United States and Russia.

 

https://news.cgtn.com

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Iranian-Omani Gas Pipeline: A Link for Iran to the World?

To meet its growing energy needs, Oman is looking to increase its natural gas supply above the current levels of imports brought in from Qatar via the Dolphin pipeline. While Oman also exports significant volumes of natural gas from its liquefied natural gas (LNG) facilities, it has had to devote significant amounts of its own production to domestic demand. What are the prospects for Iranian natural gas to reach Oman and global markets through the anticipated Iranian-Omani gas pipeline project?

 

Iran, which has the second largest natural gas reserves in the world, has plans to increase its exports of natural gas to other countries. At present, despite this major advantage, the country presides over a share of less than 1 percent of the world’s natural gas market. Nevertheless exporting natural gas to its neighbors is one of Iran’s priorities for the future. Iran’s export of oil and gas to its neighbors would help the region’s states resolve their problems and would promote peace and stability in the region. The Iranian-Omani natural gas pipeline would provide Iran a significant opportunity to export gas to Oman, as well as to other countries.

Iranian-Omani Natural Gas Pipeline

Natural gas consumption in the Sultanate of Oman more than doubled in the decade leading up to 2016.

Natural gas consumption in the Sultanate of Oman more than doubled in the decade leading up to 2016. Recognizing Oman’s increasing demand, in 2013, Iran and Oman signed a memorandum of understanding to build a new pipeline to export Iranian natural gas directly through the Gulf to Oman. The $25 billion agreement promised gas supplies to Oman via the construction of a subsea pipeline. While the pipeline construction was subsequently halted, the project now has a new deadline for its hoped-for completion by 2020.

The ultimate anticipated capacity of this new pipeline, called the Iranian-Omani pipeline, is 1.5 billion cubic feet (Bcf) of gas to be pumped into Oman every day. The Iranian-Omani pipeline would deliver some of the gas for processing at the Al-Anjui processing plant to send on to target markets in Oman, while the remaining pipeline capacity would be allocated to future markets in the Gulf.

A portion of the gas to be transported through the pipeline is anticipated to be converted into LNG to be shipped to target markets in East Asia and Europe. The remaining pipeline capacity will be allocated to future markets in the Gulf states. The project, long anticipated, was initially estimated at a cost of $1.2 billion, with initial volumes of 30 million cubic feet (MMcf) per day of natural gas to be transported from Iran’s Kuh Mobarak port to Oman’s port of Sohar.

Iran’s oil minister has stated that the country hopes to export Iranian natural gas to other countries of the region, especially Asian countries, through Oman. After the Joint Comprehensive Plan of Action (“JCPOA”) nuclear agreement was reached in 2015, Iran invited foreign energy firms to invest in Iran’s energy projects, and especially the Iranian-Omani pipeline. In 2017, Iran officially invited Russia to build a gas pipeline to Oman. Ali Karder, the Deputy Oil Minister and CEO of the National Iranian Oil Company, invited Gazprom to lead construction efforts.

In September 2018, Bijan Zanganeh, the oil minister of Iran, met with his Omani counterpart. The result was an agreement to build a natural gas pipeline with a capacity of 1 Bcf per day—equivalent to 28 million cubic meters per day, or 10 billion cubic meters annually from Iran. The monetary value to Iran of this volume would range from around $1.5 million to $2 million.

Due to the United Arab Emirate (UAE)’s opposition to the pipeline crossing through its shallows, the pipeline is now expected to traverse the deeper waters of the Oman Sea, which will increase the cost and time frame for construction. Technology for the construction and installation of a pipeline is also problematic. Iranian companies are not experienced in installing pipeline in waters deeper than 1000 meters, thus making the involvement of an international partner essential for the project’s success.

Initial talks on a joint gas project with Iran were launched in 2004, but because Iran’s gas balance was not positive and consumption outweighed production at the time, negotiations then were hypothetical, at best. But with the arrival of the eleventh government and new phases of the South Pars Fields boosting Iran’s natural gas production, exports to other countries were put back on the agenda, with 92 rounds of rigorous negotiations ending in the signing of a final agreement.

Effect of Sanctions

In first months of 2018, with the benefits of the JCPOA nuclear agreement still formally in place, a joint work plan for the sale of gas to Oman from the Kish Gas Field was signed at the joint meeting of the Iranian oil industry with various ministers from Oman. The volume of the Kish field reserves is estimated at around 48 trillion cubic feet of gas.

Renewed U.S. sanctions against the Iranian energy sector will affect energy projects such as the Iranian-Omani pipeline, and bring along other practical challenges. Oman is banking on U.S. sanctions only applying to Iran’s oil exports and not to exports of natural gas. Oman’s Oil Minister, Mohammed Al-Ramhi, has stated that the country will continue to import gas from Iran, despite sanctions from the U.S. and that the pipeline project will go ahead.

Natural gas is stored in Oman either to fill reserves or to be sent off to target markets. As Oman has sought to diversify its economic prospects in the last few years, following a decline in its natural gas production and a shortage of gas, as well as other economic shortfalls, the proposed pipeline with Iran is part of this strategy.

Iran is expected to add a substantial amount of pipeline infrastructure across the Middle East in the coming years by building 12,698 kilometers (km) of planned pipelines by 2022.

Iran is expected to add a substantial amount of pipeline infrastructure across the Middle East in the coming years by building 12,698 kilometers (km) of planned pipelines by 2022. According to Global, the distance of the route planned for the Iranian-Omani pipeline is 50 percent of Iran’s overall projected pipeline. Second to Iran comes Iraq in terms of planned pipelines, which plans to invest $29.6 billion by 2022 by adding 5,105 km of oil and gas pipelines. Turkey comes in third place with a planned 2,030 km of pipeline at a cost of around $5.8 billion.

Iran needs to diversify its exports to the same degree that Oman needs natural gas imports to offset its energy shortages. As of 2014, Oman imported about 73 Bcf of natural gas from Qatar through the Dolphin pipeline, which runs from Qatar to Oman via the UAE, but it planned to phase out such imports when Phase 1 of the Khazzan tight gas field in Oman, operated by BP, commenced production in 2017. The Khazzan field commenced operations in Q4 2017, but it is still too early to tell how it will impact Oman’s imports in the longer term.

What Does the Future Hold?

While Oman’s economic development is based on energy-dependency, there are also political and geopolitical considerations at play. The gas pipeline between Iran and Oman is the bridge between Iran and the Gulf Cooperation Council (GCC) countries. Because it most certainly will not be limited only to exporting Iranian gas to Oman, Iran will likely export gas to other countries via Oman as an intermediary. If this strategy succeeds, then another line may be built parallel to this pipeline in the long-term.

Trouble may be in store from the GCC countries, naturally suspicious of Iranian products entering their market. On the other hand, Oman has always pursued an independent policy, despite its membership in the Council. Its pipeline construction policy undoubtedly will follow that tradition. By creating a possible opportunity for dialogue between Iran and the United States, Oman may even benefit politically from the move. Oman has always pursued a policy of tolerance and peaceful coexistence with the countries of the region and resolving issues through dialogue and mediation. Although it faces pressure and problems from its neighboring countries, its policy has continued steadfast despite opposition.

In 2017, a number of meetings were convened in which Indian, Iranian, and Omani officials discussed Iranian gas being transported to India via the Iran-Oman pipeline in order to offset the impact of U.S. sanctions and to allow Iran access to one of its key consumers. As of the end of 2018, however, there has been no major progress on the Iranian-Omani pipeline, and thus any talk of further exports to India via the project is at present just a pipe dream.

Although the technology to manufacture and install pipelines in a shallow sea bed is available to Iranian companies, Iran would certainly jump at the chance to use international technology and financial capital to complete the Iranian-Omani pipeline given its inexperience with projects deeper than 1000 meters. LNG exports comprise one of Iran’s main plans to export natural gas to the European Union (EU) market.  

The Iranian-Omani pipeline project would be an ingenious way to realize this goal. Iran requires further financial capital and technology, however, to build the required infrastructure to export natural gas to the EU and to Iran’s other future target energy markets. However, given the sanctions, no major foreign energy firms are likely to provide the financial or other support needed in the short-term.

www,insidearabia.com

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The Future of Iran-Pakistan Energy Relations Seems Dim

With the re-imposition of sanctions on Iran, it is not just the Islamic Republic’s global, but regional energy links which have been shaken, spelling bad tidings for future economic and political cooperation. Alternatives to Iran’s drastically under invested energy sector abound for those countries which, like Pakistan, are undertaking serious efforts to make up for their own deficits. What can the current state of relations between Pakistan and Iran tell us about the future of regional energy relations?

 

With a population of almost 200 million, Pakistan ranks as the twenty-sixth largest economy in the world. This demographic advantage brings with it greater urgency in matters regarding energy. According to the U.S. Energy Information Administration, 62% of Pakistan’s population is dependent on biofuels, such as wood, for cooking and heating. Given this high rate of dependency, the extent to which whole swaths of the country are lacking in electricity and gas becomes clear.

 

Recognizing the needs of the population, the Pakistani government has proposed a plan to increase domestic energy production and hydrocarbon exploration, increase natural gas imports, diversify the combined capacity of installed electricity production, improve domestic standards for energy efficiency, and gradually eliminate natural gas subsidies.

 

Iran shares land and maritime borders with several countries, such as Turkmenistan and Qatar, which are rich in gas resources. Others in close proximity, such as Afghanistan, Pakistan, and Armenia, as well as the UAE, Kuwait, and Oman, are still in need of natural gas suppliers. In addition, Iran is home to a wide network of pipelines which (with the exception of 90 to 100 days during the winter when domestic demand peaks) has the capacity to transport gas to countries in need of additional sources of gas for much of the year.

 

Thus, in many ways, Iran is ideally positioned to benefit from both transportation and swap deals, provided there is active cooperation through diplomacy and allowing the energy industry representation in regional initiatives. The realization of this potential, however, is evidently being held back by the unfavorable international conditions to which Iran has fallen victim, not to mention its own weak attempts at energy diplomacy initiatives and active participation in energy transmission projects.

 

In 1990, Pakistan began negotiations with Iran for gas exports. At the same time, India’s growing energy demands led to joint support for what was termed the Peace Pipeline, which signaled a new chapter in India and Pakistan’s relations under which the two rivals would come together to enjoy the mutual benefits of Iranian resources. In 2011, however, due to U.S. pressure, India withdrew its support for the Peace Pipeline, an unfortunate development for Iran which had hoped the pipeline would serve to develop and expand its friendship and cooperation in the region.

 

According to the initial agreement, Iran would have transported natural gas via a 2700-kilometer pipeline through Pakistan to India. It was anticipated that in the event of a final agreement, 1100 kilometers of the pipeline would be constructed in Iran, 1000 kilometers in Pakistan, and 600 kilometers in India. The plans projected that 150 million cubic meters of gas would be exported daily to the subcontinent: 90 million cubic meters for India, and 60 million cubic meters for Pakistan.

 

Iran completed its own extension of the pipeline to deliver natural gas from South Pars to the Iran-Pakistan border by December 2014, long before the deadline. However, Islamabad has still not taken steps to comply with its own obligations, and no practical steps towards the construction of the project in Pakistan’s territory have been undertaken.

 

Diversification of energy resources represents a major pillar of Pakistan’s national energy policy. At present, Pakistan is planning to import natural gas and liquefied natural gas (LNG) from new sources, as well as importing electricity from Turkmenistan. Renewable energy will also play an important role in Pakistan’s energy basket in the coming years.

 

Running Rings Around Iran: The TAPI Project

 

One of Pakistan’s alternatives in diversifying its energy resources comes in the form of the TAPI project, which was designed to deliver Turkmen natural gas to India via Afghanistan and Pakistan. The project was first conceived with U.S. support in 1990 as a means of boosting regional links while circumventing Iran.The cost of the project is estimated to range from $7 billion – $9 billion. TAPI is projected to transfer 90 million cubic meters of gas per day along the route of Turkmenistan–Afghanistan–Pakistan–India.

The Asian Development Bank is the project’s primary sponsor, along with the World Bank, the United States, and India. In political terms, the United States and its allies, including NATO, are the most important political supporters of this pipeline.Washington’s approach to the pipeline is based on its long-term strategic goals in the region.

 

Through this economic project, the geopolitics of the region may be bolstered in the US’s favor and pave the way for the establishment of permanent bases in Afghanistan, and thus a higher presence along the borders of Iran. By removing Iran from the thriving and growing energy market of the region, the United States will cause irreparable damage to the Iranian economy and political influence in the region.

 

LNG and The Post-Pipeline Future

 

Natural gas and LNG now form 50% of Pakistan’s total energy basket, and this will increase in the coming years due to Pakistan’s new agreements with LNG suppliers. At present, Pakistan imports LNG from Qatar since a $21 billion deal was signed in February 2015 to buy liquefied natural gas from Doha. Under the agreement, Pakistan will receive 500 million cubic feet of LNG per day. The Pakistani energy crisis will likely be alleviated by imports of Qatari gas, but those imports will not resolve the problem completely.

 

Meanwhile, the shale gas revolution that the U.S. experienced in the early 2000s has provided an opportunity for the country to transition from energy importer to energy exporter – cementing its role with increasing success since 2017. 3.166 million cubic feet of these U.S. exports are planned for Pakistan. U.S. natural gas is key to diversifying the nation’s energy supplies while expanding trade relations.

 

The U.S.’s reliance on the shale gas revolution and increasing LNG exports to expand and develop relations with neighbors and allies provide Pakistan with an enthusiastic alternative supplier also looking to divert Iranian gas interests. The shale gas revolution and LNG exports provide a new tool for the U.S. to wean allied nations off of Iranian oil and gas. In 2018, Pakistan has imported 13 billion cubic feet (Bcf) of LNG from the U.S. — a huge increase compared to the previous year’s figure of 3.2 Bcf.Seeking new, more robust opportunities afforded by sea channels, Russian energy giant Gazprom is considering the possibility of supplying 5-7 million tons of LNG annually to Pakistan. In July 2014, Pakistan and Gazprom signed an agreement to construct three LNG terminals, with the first shipment arriving on July 2015. Currently, as noted above, Pakistan is increasing its LNG imports from Qatar, and hopes to do the same with Gazprom’s gas authorities; work is on-going to find ways of boosting Russian LNG exports to Pakistan.

 

In 2016, Pakistan and Azerbaijan agreed to sign deals in various fields including those that would allow Azerbaijan to supply the country with electricity, crude oil and refined petroleum products, liquefied petroleum gas (LPG), and LNG. Pakistan is increasing its LNG intake amid increasing demand for gas and decline in production. In 2017, the State Oil Company of Azerbaijan Republic (SOCAR) won a tender to supply Pakistan with two LNG cargoes to be delivered in October according to Pakistan LNG. SOCAR began delivering LNG to Pakistan in October. The LNG was delivered in two cargoes, each carrying 140,000 cubic meters.

 

Natural Gas Price, Electricity Generation

 

The cost of Iranian natural gas is of major concern to Pakistan, as the latter needs Iranian natural gas to generate electricity. At present, Pakistan’s demand outstrips its supply by between 4000-7000 megawatts. However, the cost of Iran’s gas as proposed by the IP project is too expensive for use in power plants. The electricity generated from Pakistan’s power plants, mainly located in the Baluchistan province, costs $3.5 per one million units, while the cost for Iran’s gas is $12.

 

Thanks to the China-Pakistan economic corridor, Islamabad will soon be able to generate electricity from coal-fired power plants. The goal of the China-Pakistan Economic Corridor project is to turn the Gwadar Port into an energy hub in the region. Islamabad is also trying to address its electricity shortage in part through other projects such as the Casa 1000 project. The Casa 1000 is one of the most important infrastructures in the regional energy market, with a capacity of 1300 megawatts from Kyrgyzstan and Tajikistan providing a very good platform for the purchase and sale of energy in the region. By transferring electricity from Central Asia to South Asia via Afghanistan, the economic benefits of Central Asia and South Asia will be met in a mutually advantageous regional arrangement.

 

Last September, Turkmenistan completed an upgrade of its largest electric power plant, which it is hoped will help boost exports and eventually allow supplies to Pakistan. In 2018, Calik Holding signed a memorandum of understating with Turkmenistan and Pakistan to invest $1.6 billion over the Turkmenistan-Afghanistan-Pakistan transmission line. Afghanistan and Pakistan will receive 1000 megawatts of electricity annually from the project, thereby leaving Iranian energy firms in the dark.

 

What is on the Horizon?

 

Iran needs to redefine the role energy exports play in its foreign policy, especially in relation to its neighbors. Iran holds the potential to use active regional energy diplomacy to maintain a share in neighboring markets, provided it succeeds in reducing tensions and thus paving the way for advanced economic benefits.

 

Pakistan is investing in renewable and planning to increase this portion of its energy basket with the construction of a hybrid solar-wind energy system to bring energy to rural areas.

U.S. sanctions against Iran are clearly another factor that will drive Pakistan toward other energy partners. Iran may well lose Pakistan as an electricity importer, especially with the progress being made in electricity deals with Turkmenistan. If Iran intends to be present in the Pakistani energy market, it first ought to offer reasonable prices which can compete with Al-Anjali as well as Turkmen gas, as worked in the case of retaining Indian business.

 

If Iran can break the deadlock with the U.S., it may finally benefit from the financial capabilities and technology needed to produce more oil and gas to export to its neighbors. If the oil and gas pipeline projects which connect Iran to its neighbors function at their highest capacities, then the links forged through the deals which result could be a key to bringing peace and stability in the region — with the added bonus of making it much harder to impose effective sanctions on Iran after such links have been cemented.

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The Future Of Iran-Pakistan Energy Relations

Energy relations form one of the main pillars of Iranian-Pakistani relations. In 1990, increased domestic demand for natural gas led Pakistan to begin negotiations to export gas from Iran. India’s growing energy demand led to joint support for a 2,700-kilometer “Peace Pipeline” that would allow India and Pakistan to import Iranian resources. According to the initial agreement, 1,100 kilometers would be constructed in Iran, 1,000 kilometers in Pakistan, and 600 kilometers in India. A projected 150 million cubic meters of gas would be exported daily to India and Pakistan, with 90 million cubic meters for India and 60 million cubic meters for Pakistan.

In 2011, however, due to U.S. pressure, India withdrew its support for the Peace Pipeline. This was bad news for Iran, which hoped that the pipeline would help develop and expand its friendship and cooperation in the region. Nevertheless, Iran completed the required pipeline to deliver natural gas from South Pars to the Iran-Pakistan border by December 2014. But Islamabad has not taken any practical steps to keep to its end of the deal.

Pakistan’s former Ministry of Foreign Affairs spokesman has stated that in order to achieve long-term goals of regional stability, Pakistan’s national interest require new energy transit projects. Pakistan supports the economic strengthening of the region and has stated that the energy and energy sectors are important factors in realizing regional political and economic goals. But it has increasingly looked to places other than Iran to develop these resources.

One of Pakistan’s alternatives to diversifying energy resource is the TAPI project, a U.S.-backed rival to the Peace Pipeline proposed back in 1990 to deliver Turkmen natural gas to India via Afghanistan and Pakistan. India joined the project in 2008. The leaders of the four countries signed an implementation contract in December 2015, and practical work finally began in 2016. The first gas will start to flow in early 2020. The project will cost an estimated $7-9 billion and will transfer 90 million cubic meters of gas per day to these countries.

Liquified natural gas (LNG) now forms 50 percent of Pakistan’s energy basket, and this will increase in coming years due to Pakistan’s new agreements with LNG suppliers. In February 2015, Pakistan signed a $21 billion deal to buy 500 million cubic feet of gas a day from Qatar. The arrival of Qatari gas will alleviate but not solve Pakistan’s energy crisis. So, Pakistan is looking elsewhere. Because of the shale gas revolution, the United States became an energy exporter by 2017 and plans to send about 3 million cubic feet to Pakistan. The Russian energy giant Gazprom is also considering the possibility of supplying 5-7 million tons of LNG annually to Pakistan. In July 2014, Pakistan and Gazprom signed an agreement to construct three LNG terminals, and the first shipment arrived in July 2015. Pakistan and Azerbaijan also signed deals in 2016 for the latter to supply electricity, crude and refined oil products, and both LNG and liquefied petroleum gas (LPG). The Azerbaijani state oil company SOCAR will begin delivering LNG to Pakistan in the coming months.

At present, Pakistan lacks 4,000-7,000 megawatts of the energy it needs. Iran is a natural place to turn. But the cost of Iran’s gas is too expensive for use in Pakistan’s power plants. The electricity generated from Pakistan’s power plants, mainly located in Baluchistan province, costs $3.5 per one million units, while the figure for Iran’s gas is $12. Increasingly Pakistan is looking east. Thanks to the China-Pakistan economic corridor, Islamabad will soon be able to generate electricity from coal-fired power plants and import electricity from places like Turkmenistan. The larger goal of the China-Pakistan Economic Corridor project is to turn the Gwadar Port into an energy hub in the region. Islamabad is also trying to address part of its electricity shortage through other projects such as the Casa 1000 project, which is designed to boost the electricity trade between the Central Asian countries of Tajikistan and Kyrgyz Republic and the South Asian countries of Afghanistan and Pakistan.

Iran needs to rely on energy diplomacy to maintain regional markets and especially to reduce tensions with neighbors, thereby paving the way for advanced economic benefits. Pakistan is investing in renewables and planning to increase the share of renewables in its national energy basket with the construction of a hybrid solar-wind energy system to bring energy to rural areas. If Pakistan can attract foreign capital and technology to build required energy infrastructure (such as LNG terminal and pipelines), it will require less Iranian natural gas and electricity, instead relying on others to make up the shortfall. U.S. sanctions against Iran will be another factor influencing Pakistan’s preference for energy partners.

www.lobelog.com

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The Challenges and Opportunities of Iranian LNG Projects

Over the past few decades, the share of natural gas in the global fuel basket has grown considerably. All predictions point to gas becoming the largest source of energy in the world, reaching over 28% by 2035. At present, countries such as US, Russia, Australia have made huge investments aiming to take a higher share of the LNG market. Qatar, the world’s largest producer and exporter of natural gas, with a market share of around 30%, has accounted for one third of the world’s total exports in recent years. Considering Qatar’s policies and increasing investment, it is expected that the export capacity of this product will only increase. America is struggling to keep up, and in the light of advanced technology with government-backed innovation projects and financial support, as well as the active participation of the private sector, it is planning to stake its own claim in the global energy market. Unconventional oil and gas production has turned the country from an energy importer to an energy exporter. According to the US Energy Information Administration, the country is set to become the third largest LNG exporter in the world after Qatar and Australia, with a daily production of 9.6 cubic meters a day.

 

Iran holds huge oil and gas reserves, yet is unable to play a role in Middle Eastern or world natural gas market. Iran annually exports only 10 bcm natural gas to Turkey, and is unable to complete any of the five LNG projects it has drawn up. Since the revolution, sanctions by the US have directly targeted Iran’s energy sector and decreased oil and gas production capacity, meaning that despite possessing the world’s second largest natural gas reserves, Iran now contributes just less than 1% of global natural gas. During the Obama administration, many foreign companies which were active in Iran’s energy sector withdrew from Iran, making it unable to reach its goal to increase natural gas production capacity. Iran planned to build five LNG facilities to produce 70 million ton of LNG annually to enter the LNG market.

 

Ali Kheyr Andandish, Iranian Managing Director of Natural Gas Liquidation states that if the LNG project can be implemented and produce the projected 80 million tons of gas, Iran will rank fourth among global exporters, but could also reach fifth place with a respectable 20 million tons. Plans have since been scaled back, with the country aiming to reach only seventh or eighth place in the world with a production of 10 million tons. Regarding gas pipeline routes, Iran’s planned pipeline through Iraq to Syria and on to Europe has been welcomed by European countries, and if conditions are favorable, European partners are looking to participate in the development of these plans. Iran’s gas exports to Europe via pipelines and LNG are in progress, allowing for multiple purchase mechanisms.

 

At present, Iran’s priority is to complete its LNG project with a production capacity of 10 million tons per year. The project is 52% in progress, and $4-6 billion is needed to complete work. So far, negotiations have been ongoing with foreign companies to complete the project, but all have yet to be concluded.

 

Iran has a number of plans to attract foreign capital and technology to become an LNG exporter. One of Iran’s plans include exporting natural gas to Oman via a planned Iran-Oman natural gas pipeline and using Omani LNG facilities to transit gas further afield. The Iran-Oman natural gas project plans to produce and export around 2 million tons of gas per year.The planned pipeline would connect Iran’s vast gas reserves with Omani consumers as well as with liquefied natural gas (LNG) plants in Oman that could re-export the gas mainly to Asian market. In 2013, the two countries signed an agreement to supply gas to Oman through the new pipeline in a deal valued at $60 billion over 25 years.

 

Iran’s other plans include producing LNG using Russian technology and capital. In 2017, Gazprom showed interest by signing an agreement with the National Iranian Oil Company (NIOC) to build an LNG gas facility. The joint geopolitical strategies of Russia and Iran have paved the way for the broad cooperation of two companies, especially in the field of oil and gas. This autumn, Gazprom signed a two-year deal with Iran on natural gas liquefaction (LNG) and contributed to the project to build a gas pipeline and transport natural gas from Iran to Pakistan and India. By December 2017, Iranian officials announced a six-month window in which Gazprom was invited to work on the project. However, further action has not been forthcoming and negotiations have so far led nowhere.

 

After the nuclear agreement was signed, Iran invited foreign companies to invest in the country’s five LNG plans, also asking Chinese energy firms to build small scale LNG facilities. In May 2016, the director of Iran’s national gas export company stated that Chinese companies ought to invest in the construction of CNG units and mini-LNGs in Iran, adding that Iran  was ready to supply LNG units. Again, no progress has been made in this regard.

 

Given developments in the energy market and the probable opposition by the Trump government of Iran’s recent missile tests, attracting foreign capital and technology to the Iranian energy industry, especially the LNG industry, looks harder than ever. Furthermore, due to the saturation of the LNG market, now with the assumption of raising funds, Iran has little chance of active participation in this sector. With the long-term planning, attracting the necessary capital and increasing LNG production with the establishment of new LNGs, it might be possible to have an effective presence on this market. Risk reduction in the country will encourage foreign companies to invest in Iran.

 

Iran has signed an agreement to produce LNG with Norway’s IFLNG , with natural gas to be provided by the South Pars seventh refinery to ships able to convert natural gas to LNG for transfer to sale in East Asian markets. In February 2018, Iran cancelled this agreement.

 

Iran’s plans to build small scale of LNG facilities are riddled with issues of their own. There is no guarantee that after the US withdrawal from the JCPOA they will remain interested in the Iran LNG sector, while another problem is the limitation of Chinese NOCs’ tech and capital capacities.  To sum up, if Iran is planning to become LNG exporter and plays role in LNG market needs to revise its foreign policy another problem is that to attract foreign investment Iran needs a legal framework, an efficient and fast decision process and political stability (especially in the international context). These variables are far from being achieved as we speak. Iran needs regional diplomacy in the field of energy to maintain regional markets, while the resolution of tensions with its neighbors will have a positive impact on the expansion of Iranian markets.

https://uwidata.com/

 

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Challenges Facing Natural Gas Export After the Sanctions

The share of Natural gas and LNG (Liquified Natural Gas) of the world energy market is increasing daily. In 2014, LNG’s share of the world gas market was 42% and according to International Energy Agency, this number will increase to 53% by the year 2040.

 

Among the LNG producing countries, Qatar has the highest share of exports. In 2016, of all the 264 million tons of LNG produced in the world, Qatar’s share was 77 million ton. Currently, countries such as Australia, Russia, United States, Mozambique… are investing heavily in this industry in order to increase their share of the market. As a result of the natural gas revolution in Chile and the new technologies and methods, the United States is quickly becoming one of the main LNG producers in the world, so much so that in near future, it will play an important part in the energy security of the European Union and East Asian countries. Since LNG export is more efficient than natural gas export, especially in long distance, we are now witnessing a new competition among the LNG producers over more shares in the market.

 

Despite having 18% of the world’s gas resources, Iran is unable to produce LNG. Iran has less than 1% of the world gas market and with the current patterns, its chances for increasing this share is slim. Before the US and EU sanctions over the nuclear program, Iran had made plans for LNG production. Three important projects of LNG, Persian, and Pars were left unfinished due to sanctions and foreign companies involved such as Shell, Repsol, Total, and Malaysia’s Petronas were forced to leave the county. “Iran LNG” project which is in 52% development, was designed for producing 10 million tons of LNG a year. After JCPOA, the regime wanted to finish this project with foreign investment and technology. The project required 4 billion dollars, but even before the United States’ decision to exit the deal, the negotiations with foreign companies were unsuccessful, and after US exit, it seems impossible to finish in such short time.

 

There were several plans designed for Iran to join the LNG exporter countries:

One of these plans was the Iran-Oman pipeline which was supposed to export 10 million square meters of natural gas a day. Iran wished to turn some of this gas into LNG in Oman facilities and then send it to market, but this deal has not come to fruition. The capacity of Oman’s facilities is about 1.5 to 2 million tons.

 

The other option was building small LNG units. After JCPOA, Iran had numerous negotiations with Russian, Chinese, and Korean companies for building small LNG units. The production capacity of these small units is 300 tons a day, and they are usually used for delivering gas to distant areas that might be difficult to reach. Iran was planning to build several of these LNG units over two years, but the sanctions and lack of interest from foreign companies prevented it.

 

Iran’s next option was using offshore LNG producing ships. Floating LNG (FLNG) is a type of ship with LNG production technology that mines a gas field under the sea and turns it into LNG. In the fall of 2017, there were negotiations between Iran and a Norwegian company to buy floaters, but that also failed.

 

Saturation of the LNG market and the competition among the producing countries will make it more difficult for the new producers of LNG to enter the market. Iran’s vast resources of natural gas is a good opportunity for the country to play a role in the regional and international market by producing LNG. Exporting LNG to distant countries through pipelines is not efficient. The safest alternative is for Iran to consider east Asia, India, and the European Union for LNG export in the long run. But without any changes to its regional policies, the Islamic Republic will have a hard time attracting foreign investments. The main obstacle to drawing investments in the energy industry, especially in natural gas and LNG, is the lack of a legal structure for effective and quick decision making and the country’s political instability. These are not difficult to overcome if there is a political will to use natural gas in order to improve the economic and political conditions of the country.

 

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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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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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