Greater Caspian Weekly Overview - October 29th

Iran

Gas swap to decrease Iran’s gas transit expenditures

Russian Energy Minister Alexander Novak announced on October 23th that Gazprom has offered a gas swap with Iran, which can decrease Iran’s gas transit expenditures.

Novak said that Russia can deliver gas to Iran’s northern regions and receive Iranian LNG in Persian Gulf.

Iran has an LNG plant, which is 50 percent developed and it is projected to become operational by 2019.

Russia and Iran are connected with 1474.5-km-long Gazi-Magomed-Astara-Bind-Biand gas pipeline, put into operation in 1971 and Azerbaijan has upgraded it last decade and installed the Astara gas compressor station. However, the delivery capacity of this pipeline is restricted and Russia can deliver only 4 billion cubic meters of gas per year (bcm/y) to Iran's northwestern regions. Iran has a plan to construct a 1850-km pipeline with 110 mcm/d (40 bcm/y) of gas transit capacity to these regions, aimed to gas export to EU as well. The cost of construction of this pipeline (9th cross-country pipeline) is estimated at $6 billion. Alongside the construction of this pipeline with 17 gas compressor stations, the operational expenditures of 110-mcm/d gas transit from South Pars to northwestern regions may reach even above $1 billion annually.

Iran has also a $4 billion project (11th cross-country pipeline) to deliver 110 mcm/d of gas from South Pars to northeastern regions, of which operational expenditures may reach $250 million to $300 million annually. There are infrastructures, connecting Russia to Iran through Turkmenistan to carry out gas delivery several times more than the Azerbaijani route. 

Brazil keen to import Iranian LNG

Iran’s Oil Minister Bijan Namdar Zanganeh announced on October 28th that Brazil demonstrated willingness to import Iranian LNG and the negotiations about the realization of this deal has been continuing.

After a meeting with Brazilian Minister of Development, Industry and Foreign Trade Armando Monteiro in Tehran, Zanganeh added that two countries will establish a joint workgroup to follow up LNG deal as well as other energy-related opportunities.

Iran’s Oil Minister Bijan Namdar Zanganeh announced on October 20th that Iran is preparing to enter global LNG markets with supplying 10 million metric tons of liquefied natural gas annually.

Iran has an LNG plant, 50 percent developed by Iran LNG, however development of the project has been halted due to sanctions. Iran has invested $2.5 billion in the project and more $2.5 billion is needed in order to complete it. Iran is negotiating with German Linde Company to resume the project. It’s expected the sanctions on Iran be eliminated in the first half of 2016. 

After a meeting with Monteiro, Iranian Minister of Energy Hamid Chitchian also said that Iran is ready to export gas turbines to Brazil.

He said that Iran is one of the six countries able to produce large gas turbines.

Iran wants to liquefy its gas in Oman

Iran is eyeing to turn a part of its natural gas into LNG in Oman, Mehr News Agency quoted CEO of National Iranian Gas Export Company Alireza Kameli on October 26th.

Iran has already signed a contract with Oman ito deliver 10 billion cubic meters per annum (mcm/a) of gas through an underwater pipeline to Oman.

He added that a new contract would be signed with Oman. Part of the gas exported from Iran to Oman will be used for Oman’s domestic use and the rest will be used to produce LNG for export.

The official pointed out that 25 percent of Oman’s LNG production companies are idle at the moment that can be used for the purpose. Right now the idle capacity is about 1.5 million metric tons per year.

Oman had requested 2 billion cubic feet of gas per day from Iran in order to supply its LNG production and other industrial units.

The onshore part stretches from Iran’s city of Rudan for 200 kilometers to Kuhmobarak and the project is planned to be carried out in six months.

Azerbaijan

Azerbaijan's gas production soar M/M

Azerbaijan's gas production resumed in September after plunging in August.

Azerbaijan's gas output decreased from 2.468 billion cubic meters(bcm) in July to 1.844 bcm in August, but the figure resumed to 2.556 bcm in September, SOCAR's latest statistics indicate.

TAP shareholders not interested in selling their stakes

Snam S.p.A., an Italian natural gas infrastructure company, is still interested in taking part in the Trans Adriatic Pipeline (TAP), but none of the TAP shareholders has announced their intentions to sell stakes, according to the company’s CEO, Carlo Malacarne.

Italian media quoted Malacarne on October 29th as saying Snam hasn’t lost interest in the TAP, which Trend reported on October 29th.

“We are still looking forward to take part in this project, but as of now none of the shareholders is interested in selling their stakes,” he further said.

TAP is meant to transport gas from Shah Deniz 2, an Azerbaijani gas condensate field, to the EU.

The approximately 870-km long pipeline will connect with the Trans Anatolian Natural Gas Pipeline (TANAP) at the Turkish-Greek border at Kipoi, cross Greece and Albania and the Adriatic Sea, before coming ashore in southern Italy.

TAP’s construction is expected to start in 2016. Its initial capacity will be 10 billion cubic meters per year, expandable to 20 billion cubic meters per year.

The first gas as part of the Shah Deniz 2 project will be transported to Europe via TAP in early 2020.

TAP’s shareholding is comprised of BP (20 percent), SOCAR (20 percent), Statoil (20 percent), Fluxys (19 percent), Enagas (16 percent) and Axpo (5 percent).

Turkey to earn $95.2 M taxes revenues from TANAP

The CEO of SOCAR Turkey Kenan Yavuz announced on its Facebook page on October 23rd that it's expected that Turkey’s tax revenues from Trans-Anatolian Pipeline (TANAP) after full operation to reach $95.2 million per annum.

TANAP is aimed to transit 16 bcm/a of gas, including 6 bcm to Turkey and delivering 10 bcm to Trans Adriatic Pipeline to be supplied to EU.

The revenue of transiting 1,000 cubic meters of gas for Turkey would be $5.95, he said.

SOCAR, Gazprom preparing contract for swap supplies 

Azerbaijan’s state oil company SOCAR is not yet receiving gas from Russia’s Gazprom, according to Rovnag Abdullayev, the Azerbaijani company’s president.

Speaking to reporters in Baku October 29th, Abdullayev said that currently the parties are discussing the technical details of the issue.

“Negotiations between SOCAR and Gazprom are currently underway. Now we are working out the technical details of a contract, but it is yet unknown exactly when it [the contract] will be signed,” he further said.

Abdullayev went on to add that Russia’s gas will be supplied with a view to inject it into Azerbaijan’s underground storage facilities in order to use them at full capacity.

Gazprom started delivering gas to Azerbaijan on September 29th, but the deal was suspended after 22 days.

Turkmenistan

Japan and Turkmenistan signed a package of projects deals worth $18 billion worth, mostly on petrochemicals and power generation sectors on October 23rd.

Turkmenistan as the number forth in the world in term of gas reserves eyes development of downstream projects alongside upstream gas projects.

Japanese Prime Minister Shinzo Abe kicked off a trip to Turkmenistan last week.

"We planned to sign documents on a number of projects in the chemicals sector and power station construction for a total sum of more than $18 billion. These documents have just been signed," Abe said.

Investment agreement on TAPI project signed in Turkmenistan

The 23rd meeting of the steering committee on the project for constructing the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline has been held in Ashgabat, Turkmenistan, said the message from the country’s Ministry of Oil and Gas Industry and Mineral Resources.

The shareholder and investment agreements were signed following this meeting.

“Today, the TAPI gas pipeline project is at the crucial stage,” said the ministry.

According to Trend, Turkmenistan for its part expressed readiness to sign the agreements and intends to start the construction of the pipeline in December 2015, according to the message.

During the meeting, the sides expressed their opinion on the project and unanimously approved the signing of the agreements, said the ministry.

The basic document for the TAPI project is the Ashgabat interstate agreement on launching the practical implementation of this project signed between the participating countries in 2010. The annual pumping capacity of the gas pipeline will be 33 billion cubic meters.

The gas pipeline’s total length will be 1,735 kilometers; some 200 kilometers will run through Turkmenistan, 735 kilometers –Afghanistan, 800 kilometers – Pakistan to the Fazilka settlement on the border with India.

The cost of the TAPI project is up to $10 billion.