Greater Caspian region weekly overview

Greater Caspian Region Weekly Overview - October 18th

Iran

Obama orders steps towards lifting Iran sanctions

President Barack Obama ordered the US government on October 18th to take steps towards lifting sanctions on Iran.

October 18th was the so-called "Adoption Day" for the deal, which came 90 days after Iran, the United States, Britain, France, Germany, Russia and China reached an agreement under which most sanctions on Iran would be lifted in exchange for limits on Tehran's nuclear activities.

Obama's directive comes 90 days after the UN Security Council endorsed the accord signed in Vienna in July, a milestone referred to as "Adoption Day."

The measures will take effect upon confirmation by the Secretary of State that Iran has met its commitments under the so-called Joint Comprehensive Plan of Action (JCPOA), as the accord is known, Obama said.

List of sanctions lifted from Iran’s oil, gas, petrochemical sectors:

Iran and the P5+1 Group reached a comprehensive nuclear deal on July 14th. According to the 159-page agreement (JCPOA), these sanctions in oil, gas, petrochemical sectors were eliminated:

Import and transport of Iranian oil, petroleum products, gas and petrochemical products
Export of key equipment or technology for the oil, gas and petrochemical sectors
Investment in the oil, gas and petrochemical sectors
Investment, including participation in joint ventures, goods, services, information, technology and technical expertise and support for Iran's oil, gas and petrochemical sectors
Purchase, acquisition, sale, transportation or marketing of petroleum, petrochemical products and natural gas from Iran
Underwriting services, insurance, or reinsurance
Efforts to reduce Iran’s crude oil sales
Export, sale or provision of refined petroleum products and petrochemical products to Iran
Transactions with Iran's energy sector
Transactions with Iran’s shipping and shipbuilding sectors and port operators

Furthermore, the EU is expected to announce the elimination of Iranian sanctions by October 19^th.

Officials of 10 international giant oil&gas companies in Tehran

Top officials of French Total and Air Liquide, Austrian OMV, Italian Eni and Ansaldo, Japanese Mitsui, Chiyoda, JGC and Mitsubishi Hitachi Power Systems, German Linde and Siemens as well as multinational company of FJE arrived in Tehran to meet with Iran’s Oil Minister Bijan Namdar Zanganeh and Energy Ministry Hamid Chitchian on October 19th.

Iran is to unveil a newly designed oil and gas contract (IPC) to foreigners next month to attract investments to develop 45 oil and gas field. The country has defined hundreds of both upstream and downstream projects to absorb $185 billion investment in a decade.

Alexander Novak, Russian Energy Minister, is also scheduled to visit Iran next week in order to meet and talk to Bijan Namdar Zanganeh, Iran’s Oil Minister, Mehr News Agency reported.

At the same time, CEOs and managers from companies including Gazprom, Rosneft, Gazprom Neft, Zarubej Neft, Transgaz and also Bashneft will be in Iran next week.

Besides representatives from gas and oil companies, CEOs from the electricity and energy company of Rosseti Neft, Inter RAO, Technopromexport, ROS Hydro and ANEX will journey to Iran as well. Meanwhile, Lukoil does not appear in the list. Lukoil reportedly is keen to return Iran and resume development of Azar oil field project.

Iran studying gas export to Afghanistan

Ali Rasoulian says Iran is studying gas export feasibility to Afghanistan’s Herat Province.

Currently Iran exports LPG to this country, but the country is studying possibility of construction a 100-km pipeline from Khorasan Province to Herat.

Rasoulian said that Afghani private companies have announced readiness to take part in this project, without giving further details about the volume of gas, cost of pipeline construction and the names of companies.

Before, in February, Hamid-Reza Araqi, the managing director of the National Iranian Gas Company (NIGC), has said that the Iranian gas can be piped to Afghanistan through border cities.

He said that beside pipeline, Iran can also export gas to Afghanistan through mini-LNG projects.

Araqi further said Iran is ready to start creating the infrastructure needed for exporting gas to Afghanistan.

He added that several Iranian private-sector companies have voiced interest to participate in this project.

Iran’s announcement to supply Afghanistan with gas came while Turkmenistan, Afghanistan, Pakistan and India decided to start development of TAPI pipeline.

The construction of the Turkmen section of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) interstate gas pipeline with a capacity of 33 billion cubic meters of marketable gas per year will be conducted by the domestic fuel and energy complex of Turkmenistan, the Neutral Turkmenistan newspaper said on October 17.

Iran petrochemical production ups 5% Y/Y

Iran produced 23.6 million metric tons of petrochemical products during first half of current fiscal year (Started on March 21), indicating 5 percent increase year-to-year.

Iran’s petrochemical plants have worked with 76 percent of nominal capacity during this period, 4 percent more than the previous year.

Iran planned to attract $35 billion investment to add 60 million tons of petrochemical production capacity by 2020.

During the first half of Iran's fiscal year, the country increased petrochemical products export by more than 35 percent in volume to 12.135 million tons, but the revenues decreased by 0.2 percent to $7.128 billion year-to-year. Petrochemical products export exceeded pre-sanction level during last six month.

Azerbaijan

Azerbaijan gas production decreased in Jan-Sep

The State Statistics Committee (SSC) released a report on October 15th, saying that the country’s gas production decreased by 4.4 percent in January-September. Some 21.675 bcm of natural gas (including re-injected gas) was extracted during this period.

However, according to the report, some 14.424 bcm of marketable gas was produced in 9 months, indicating a 4.2 percent increase year-to-year.

The country’s marketable gas output reached 18.827 bcm (including 14.99 bcm of natural gas abd 3.837 bcm of associated gas) in 2014, 5.2 percent more than the previous year. The associated gas is produced from Azeri-Chirag-Guneshli oil fields and the statistics indicate that the share of associated gas in Azerbaijan’s total marketable gas decreased from 28 percent in 2010 to 20 percent in 2014. The reason is that Azerbaijan has re-injected more associated gas to these fields year to year to slow declining oil production level from these fields which are in their second half-life and face natural production decline.

Azerbaijan preparing to develop new gas projects

Khoshbakht Yusifzadeh, the First Vice-president of the State Oil Company of Azerbaijan Republic (SOCAR) for Geology, Geophysics and Field Development said that Azerbaijan has several new gas projects which will allow for significantly increased output.

Replying to Natural Gas Europe’s question on the sideline of a business forum co-organized by the Caspian European Club and SOCAR, Yusifzadeh said that “we continue drilling the third well in Umid gas field, commenced by SOCAR in 2010." He also said that Azerbaijan is preparing to evaluate installing a new platform in Bulla Deniz gas field to increase gas production. Azerbaijan also is planning to develop Absheron gas field.

Turkmenistan

“Trans-Caspian Gas Pipeline is promising”

The Project of Trans-Caspian Gas Pipeline is promising, the President of Turkmenistan Gurbanguly Berdimuhamedow said on October 12th.

He said that transporting Turkmen energy resources to Europe was discussed with big interest during a forum titled "Oil and gas of Turkmenistan - investment opportunities" recently held in London, UK, with participation of 78 companies. During this forum, the legal and tax issues of the Trans-Caspian gas pipeline and export opportunities were discussed.

According to Berdimuhamedow, "Transnational energy magistrals should be observed as a real contribution to the establishment of international energy cooperation, an effective stabilizing factor that can have a positive impact on the process of strengthening the social and political stability."

Turkmenistan, which has the fourth-largest gas reserves, is exploring opportunities to enter the European market. To this end, the project is progressing laying Trans-Caspian pipeline to the coast of Azerbaijan, where the Turkmen gas can be delivered to Turkey and Europe.

Turkmenistan to build its TAPI section on its own

Earlier it was reported that the Turkmengaz state concern was unanimously elected leader of the TAPI Ltd consortium. As a leader, the concern will supervise the interaction for the construction, financing, ownership and operation of the pipeline, Trend reported.

Having this kind of experience, the experts of Turkmengaz and Turkmenneftegazgurlushyk state concerns will timely implement basic work on laying the 215-kilometer section of the pipeline in the south-east of the country, its arrangement and the establishment of the necessary infrastructure, according to the newspaper.

Turkmenistan signs framework agreement with Japanese consortium on Galkynysh field

Turkmenistan has signed a framework agreement with the consortium of several Japanese companies for developing part of the Galkynysh gas field, Neutral Turkmenistan newspaper reported.

The agreement has been signed in order to ensure the needed volume of natural gas for Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, according to the report.

Recently, the specialists of Turkmengas state concern have held a meeting with the representatives of such Japanese corporations as Mitsubishi, Chiyoda, Sojits, Itochu and JGC.

The meeting focused on the key factor of diversification of supplies, in particular, expansion of gas production and processing at the huge Galkynysh field, the reserve of which will serve as the main resource base for the TAPI international project.

The total resource reserves of the Galkynysh field and the nearby Yashlar field are estimated at 26.2 trillion cubic meters of gas, according to the Gaffney, Cline & Associates (UK), which conducted the audit of these two fields.

Uzbekistan

South Korean company completes gas plant in Uzbekistan

Lotte Chemical, the chemical affiliate of Lotte Group, has completed construction of a huge gas chemical complex in Uzbekistan.

"The completion of the gas chemical plant is a result of close cooperation between the governments of Korea and Uzbekistan and private companies. This plan is the biggest in size in the Eurasia region built by a Korean chemical firm. Lotte is proud to put the project online," Lotte Chemical CEO Huh Soo-young said at a press conference in Seoul on October 15th.

The plan, which is on a 300,000 square meter tract, is the result of an investment of some $3.89 billion or 4.3 trillion won. In June 2014, Korea agreed with Uzbekistan to proceed with the project during summit talks.

The plant will be operational from January, Huh said.

The Surgil gas project is an mutual venture of Uzbekistan and a Korean consortium including Lotte Chemical, KOGAS and GS E&R Corp., according to a statement by Lotte.

The project was initiated in 2006, Korean media report.

Average export price of Russian gas dropped to minimum

From January to August 2015 average export price of Russian gas totaled $240 per 1000 cubic meters, the statistical report of the Russian Customs Service reported. During 8 months incomes from gas export decreased by 31% and totaled $28.2 billion. Russia exported 117.5 billion cubic meters of gas (-5.4%) during this period.

However, From January to August, Russian gas export decreased by 5.4% against the same period last year and totaled 117.5 billion cub.m., read the strategic materials of the Federal Customs Service.

Export to Far Abroad (Europe) increased by 3.1% up to 92.2 bcm, while exports to Near Abroad totaled 25.3 bcm, 28% less than previous year.

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