Greater Caspian Weekly Overview - November 12th 2015
IRAN
Iran, Iraq sign 6-year gas deal
Tehran and Baghdad signed a 6-year agreement on November 11, aimed at exporting 25 million cubic meters per day (mcm/d) of Iranian gas to Iraq's Basra.
During 6 years, Iran will export 40 billion cubic meters of gas to Iraq. Then the sides can extend the deal.
It's expected that Iranian gas delivery to Basra will start in 2017.
Iran and Iraq signed an agreement on delivering 25 mcm/d of Iranian gas to Iraq's capital, Baghdad in 2013. Following the new agreement, Iraq will import 50 mcm/d of Iranian gas in total.
Rosneft in gas swap discussions with Iran
Two months after tough negotiations between Iran and Russia over the possibility of a gas swap, the information website of Iran's Oil Ministry has revealed that Rosneft officials are in Tehran to talk the gas swap issue.
News agency Shana has reported that, on November 11, Iran and Rosneft officials agreed to establish a joint committee to achieve gas swap operations.
Previously, on November 1, an Iranian top oil official announced that representatives of a Russian company are scheduled to visit Iran to talk about oil, gas, and oil product swaps.
Amir Hossein Zamaninia, the Islamic Republic’s deputy oil minister did not reveal any additional information about the company or the date of the visit. Currently, Gazprom is the solo Russian gas exporter, while the country's largest oil producer Rosneft has asked the government to end Gazprom's decade-long exclusive right to export pipeline gas in July.
CEOs of both Russian companies were in Iran among a delegation headed by Russian Energy Minister Alexander Novak last month.
Novak said earlier that Russia can deliver gas to Iran’s northern regions and receive Iranian LNG in the Persian Gulf.
Iran has an LNG plant, which is 50% developed at present. It is projected to become operational by 2019.
Russia and Iran are connected via the 1474.5-kilometre-long Gazi-Magomed-Astara-Bind-Biand gas pipeline. It was put into operation in 1971. Azerbaijan upgraded it last decade and installed the Astara gas compressor station.
Other infrastructure connections, which link Russia to Iran through Turkmenistan, carry out several times more gas delivery than the Azerbaijani route.
Iran revealed legal future of newly designed oil and gas contract
After months of confidentiality around Iran’s new model of oil contract, known as the Iran Petroleum Contract or IPC, the details of the IPC have been finally disclosed. Despite expectations, Iran has kept its sovereignty over its hydrocarbon reserves, but the new contract has some advantages over previous models, namely contract-based and buy-back advantages.
Iran says it needs to invest $185 billion in its oil and gas projects over the next five years. First Vice President Es’haq Jahangiri has issued a communiqué on the government’s official website relating to the general conditions and requirements of the new model of contracts for upstream oil and gas industries.
At present, the government’s approval only outlines generalities of the IPC. Full details will be announced in a conference that is scheduled to be held on November 20.
Iran’s petrochemical export revenues drop significantly
Iran exported 14.109 million metric tons of petrochemicals, valued at $8.205 billion, in the first seven months of the current Iranian fiscal year, which started on March 21.
Despite a 36.36% rise in volume of petrochemical exports, revenues rose by just 0.01% compared to the same period last year, according to the Iran Customs Administration's report, released on November 10th.
Petrochemical exports value accounted for 34% of Iran’s total non-oil exports in the first seven months of the current Iranian fiscal year.
Iran to expand gas network
Iran is planning to expand its natural gas transfer network in light of its plans to increase gas production capacity in the coming years.
Currently, 72 gas pressure booster stations, 36 operation centres, and over 35,000 kilometres of pipelines transfer natural gas all over the country. The numbers will increase to 136 stations, 74 centres, and 62,000 kilometres, respectively, based on Iran’s 2025 Outlook Plan, Shana news agency reported on November 10.
The country’s gas transfer capacity is projected to reach 96 billion cubic meters by the end of Iranian fiscal year 1396 (March 2018).
Belgium may establish FLNG facilities in Iran’s Kharg Island
Belgium is in technical and economic talks with Iran to establish floating liquefied natural gas (FLNG) facilities in Iran’s southern Kharg Island, located in the Persian Gulf, an Iranian government official has said.
“If technical and economic talks between Iran and Belgium are fruitful, Belgium’s FLNG facilities will be brought to Kharg, so that Iran will produce LNG using these facilities for the first time,” Iran’s Oil Minister Bijan Namdar Zanganeh told Shana news agency on November 9.
Zanganeh made the remarks on the sidelines of a meeting in Tehran with Belgian Secretary of State for Foreign Trade Pieter De Crem.
This same week, Iran announced that European companies are talking with Iran for FLNG projects.
Total, Belgium mull increased gas cooperation with Iran
Recent negotiations and Monday’s declarations indicate that Total and Belgium might step up cooperation with Iran.
"Iranian Minister of Petroleum Bijan Zangeneh hosted a meeting with Belgian Secretary of State for Foreign Trade Pieter De Crem in Tehran to discuss future energy ties between Tehran and Brussels," wrote Shana, the news agency linked to Iran’s Ministry of Petroleum, on Monday.
In particular, Tehran is interested in Belgium’s FLNG vessels. The country would like Brussels to send its fleet to Kharg in order to help the country produce LNG.
“The Belgian side can bring its FLNG vessels to Kharg so that Iran can produce LNG there for the first time provided that both sides show flexibility and the technical and economic negotiations bear results in not a long period,” Minister of Petroleum Bijan Zangeneh commented as reported by Shana.
Italy, Germany release Iran’s blocked petrochemical equipment
Italian and German firms have begun releasing blocked petrochemical equipment destined for Iran in recent months, according to Marzieh Shahdaee, director of projects at the National Petrochemical Company of Iran.
“The companies are cooperating and, so far, some blocked equipment has been handed over to Iran,” Shahdaee said, Iran’s official IRNA news agency reported.
She further noted that after the sanctions imposed upon the Islamic Republic intensified, some of the equipment purchased for petrochemical projects in Iran was seized, after which sellers refrained from delivering equipment to Tehran.
Iran plans to build LNG carrier
Iran has signed a deal with a German company to commission the building of an LNG carrier, Esmail Sadeqi, director of the LNG tanker construction project, said.
This will be Iran's first commissioned LNG carrier. It will be put to use in the near future when the country starts producing and exporting LNG, the Mehr news agency reported on Nov. 6.
Sadeqi added that two shipyards were being built for the construction of this ship, noting that one of the yards was 485 meters long and was therefore suitable for making even very large ships.
Iran intends to complete its LNG project in the post-sanctions era and then export LNG to various countries--European countries, in particular, the official said.
Iran “breaks” Statoil's record in South Pars
Iran has commissioned a platform of the South Pars gas field phase 16 within 5 months and 10 days, breaking Statoil record which was 6 months and 15 days.
Kamran Mehrdadi, manager of project for building platforms of the South Pars phase 14, said four platforms of the phase 14 are being built by Iran Shipbuilding and Offshore Industries Complex in the southern city of Bandar Abbas, IRNA news agency reported on November 6.
He added that building of the platforms is complete by 70 percent. Due to a delay in the offshore section of the phases 17 and 18, two platforms of the phase 14 are planned to be transferred to the phases 17 and 18, he explained.
Iran’s housing gas consumption doubles in a week
During the first week of November, Iran's housing gas consumption doubled, compared to the previous week.
Manoochehr Taheri, director of the dispatching center at the National Iranian Gas Company, said that during this period, Iran’s housing gas consumption increased from 160 million cubic meters per day (mcm/d) to 320 mcm/d. This figure is expected to reach 350 mcm/d next week.
He also said that housing gas consumption is expected to soar to 500 mcm/d in January.
Iran produces 700 mcm/d of enriched gas as well as 550 mcm/d of sweet gas.
He said that during the 226 days since the beginning of the current Iranian fiscal year (March 21), some 42 billion cubic metres (bcm) of gas were supplied to the country's power plants, Shana news agency reported on November 7.
That figure is a more than 16% rise compared to the same period last year, he added.
It is estimated that the volume of gas supply to Iran's power plants will reach 58.2 bcm by the end of the current year, he noted. The power plant sector requires as much as 72 bcm of gas per year to curb liquid fuels usage in this sector.
Taheri also said that 202 bcm of gas was produced in Iran during the last fiscal year, of which 190 bcm was consumed domestically. Some 51% of the country’s natural gas is supplied from the South Pars gas field, he noted.
According to him, Iran’s gas production increased by 6 bcm during 226 days of the current fiscal year, starting on March 21.
“More than 2.1 billion cubic meters of natural gas has been stored at Iran’s Shoorijeh and Sarajeh facilities since the beginning of the current Iranian fiscal year to re-extracted in winter,” he said.
Taheri said that the figure was 1.5 billion cubic meters in the same period last year.
AZERBAIJAN
Georgia looks at several gas suppliers, including Azerbaijan
Though Georgia has been in talks with Gazprom over gas transit and also with Iran, Azerbaijani President Ilham Aliyev has said that his country has enough gas to supply its neighbors for the next 100 years.
Azerbaijan is Georgia’s main gas supplier. The country delivers gas to Turkey through Georgia.
President Aliyev made his statement on November 6th. The statement was made after Georgian Energy Minister Kakha Kaladze announced that Azerbaijani gas cannot meet Georgia’s demands in 2016.
TANAP costs decrease by 20-25%
Azerbaijan's top oil official says the cost of construction of the Trans-Anatolian Natural Gas Pipeline (TANAP) decreased to make it 20-25% cheaper than previous cost estimates.
Head of the State Oil Company of Azerbaijan Republic (SOCAR) Rovnag Abdullayev said on November 10th that the decline of costs is a result of the decreasing price of materials.
First gas transportation via the 1,850-km pipeline is planned to commence in 2018. The pipeline will deliver 6 billion cubic metres (bcm) of gas to Turkey and 10 bcm to Europe (from 2021) annually. By 2023, TANAP's capacity will rise to 23 bcm per year and then to 31 bcm by 2026.
Maximum production from Shah Deniz expected between 2022 and 2028
Maximum gas extraction of 25 bcm/y from the Shah Deniz field is expected to happen between 2022 and 2028, said SOCAR Senior Vice President for Geology, Geophysics and Field Development Khoshbakht Yusifzada.
“The peak volume of gas extraction of 16 bcm/y from the Shah Deniz Phase 2 will be achieved in 2022 and maximum volume of gas extraction from Phase 1 and Phase 2 is expected between 2022 and 2028,” added Yusifzada.
He said initially Azerbaijan plans to export 10 bcm/y of gas to Europe, but the figure will reach up to 20 bmc/y in second stage.
Production platform in Caspian Sea to be supplied with power from shore
For the first time in Azerbaijan, an offshore production platform will operate with electricity from onshore.
Speaking at the Caspian Technical Conference in Baku, the representative of Total SA, Edouard Thibaut, said the Absheron gas field in the Azerbaijani sector of the Caspian Sea is conveniently located for transmission of electric energy from the shore.
“The system of automated platform management will allow the reduction of operation costs in the sea. The fact that the field is located relatively close to the shore allows us to supply it with electric energy from the gas processing plant in Sangachal. Thus, it is an ideal option to supply the Absheron field with electricity from the shore,” Thibaut said.
CENTRAL ASIA
Turkmenistan president orders work to start on TAPI pipeline
Turkmenistan has fired the starting pistol on the ambitious TAPI natural gas pipeline, a 1,735-kilometre route intended to supply markets in Afghanistan, Pakistan, and India.
To the applause of ministers, President Gurbanguly Berdymukhamedov announced on November 6 during the weekly Cabinet meeting that he had ordered the beginning of construction.
Kazakhstan, France create joint venture on production of industrial gases
A subsidiary of JSC "NC" KazMunayGas" - JSC “KazMunayGas - refining and marketing” and the French company “Air Liquide” have signed a shareholders agreement on the creation of the Kazakh-French joint venture for the production of industrial gases, the press service of the Kazakh company said.
The agreement provides for the withdrawal to the outsourcing of existing plants for the production of hydrogen, nitrogen and other industrial gases to refineries in Atyrau, Pavlodar and Shymkent. It also provides for ownership and management of installations, as well as the construction of outsourced new technical facilities for the production of industrial gases.
Hollande met Kazakh president in Paris
Kazakh President Noursoultan Nazarbaïev met with François Hollande at the Elysée Palace on 5 November as part of a two-day official visit in France.
The reception aimed to strengthen the economic ties between both countries in different areas of cooperation including hydrocarbon production. Patrick Pouyanné, CEO of Total, spoke with the Kazakh President about the development of the Kashagan field and other investments to come.
Russia’s Lukoil committed to implement joint projects in Uzbekistan
Russia’s Lukoil company will provide for a wide-scale and timely fulfillment of all of its commitments within joint investment projects implemented in the Uzbek hydrocarbon sector, Lukoil President Vagit Alekperov said during his meeting with Uzbekistan President Islam Karimov in Tashkent on November 10, the press service of the Uzbek President reported.
Currently in Uzbekistan, Lukoil is implementing investment projects designed to develop promising natural gas deposits of Khauzak, Shady, Kungrad, and the Kandym Group, as well as to develop oil and gas blocks of the South-West Gissar and Ustyurt Region. Joint geological prospecting works have discovered promising deposits of hydrocarbons in the Uzbek section of the Aral Sea. The Russian company’s investments into the projects in Uzbekistan have exceeded $5 billion.
Lukoil has commenced the construction of the Kandym Gas Reprocessing Plant with the use of state-of-the-art technologies to allow for deep processing of 8 billion cubic meters of natural gas per annum.
Alekperov said that this project, scheduled to be commissioned in 2018, is undertaken within the framework of the 2015-2019 Program to Intensify Reforms, Structural Transformation and Diversification of the Economy, directed at enhancing Uzbekistan’s industrial base.
Deals worth $12 billion inked at investment forum in Uzbekistan
More than 100 agreements on the purchase by foreign investors of Uzbekistan’s state-owned assets and implementation of new investment projects in the oil and gas, chemical, electro-technical, food, and construction materials industries were signed for a total amount of $12 billion (including almost $5 billion of direct foreign investments) during the International Investment Forum held in Tashkent on November 5 and 6.
Deputy Prime Minister Rustam Azimov announced the plan for privatizing more than 1,200 companies, saying the Uzbekistan signed memorandums and deals on investment projects worth a total of $12.4 billion with foreign firms on November 5th.
Average export price of Russian gas dropped 27% in 9 months
From January to September 2015, the average export price of Russian gas totalled $238.2 per 1000 cubic metres, according to statistical information from the Russian Federal Customs Service.
During the same period last year, the average export price of Russian gas was $326.5 per 1,000 cubic metres. Thus, the price dropped by almost 27%. Over a period of nine months, income from gas exports decreased by $12.8 billion to $31.331 billion.
Also over the same period, the volume of Russian gas exports decreased by 2.9% and totalled 131.5 billion cubic meters.
During this export period, Russian gas decreased by 2.9% against the same period last year and totalled 131.5 billion cubic meters.
Export to Far Abroad (Europe) increased by 5.7% up to 104 billion cubic metres, while export to Near Abroad totalled 27.5 billion cubic meters, a decrease of 25.9%.