Greater Caspian Region Weekly Overview - September 14th

Iran

List of energy companies hold talks with Iran

Since nuclear deal between Iran and P5+1 (The U.S., UK, France, Russia, China + Germany) on July 14, about 20 energy companies have started negotiations with Tehran. During this period, several top officials including those from Germany, France, UK, and Japan, traveled to Tehran as well. 

No project in South Pars for Total

After finalizing the contact between Iran’s Oil Ministry and two domestic companies (Petropars and MAPNA) to develop South Pars phase 11, no new projects in South Pars have been signed with Total.

Ali Akbar Shabanpour, Managing-director of Pars Oil and Gas Company, announced on September 12th that development of phase 11 would be carried out by Petropars and MAPNA, the negotiations are finalized and the contract would be signed as soon as possible.

Before that, Iran and Total reportedly were talking about this remaining project in the giant gas field, joint between Iran and Qatar, which Iranian side holds about 14 trillion cubic meters of gas reserves.

Iran’s oil ministry awarded Chinese CNPC the contract of development of phase 11 in 2009 after Total failed to commit to an agreement made in 2000 that envisaged this two-phased (Phases 11A and 11B) project to produce gas and build an LNG plant at Assaluyeh in southern Iran.

Iran also canceled the contract with CNPC due to long delays in 2012. Phase 11 will produce 56 million cubic meters of natural gas per day (mcm/d), 80,000 barrels of gas condensates and 400 metric tons of sulfur on a daily basis.

According to a report released by Mehr News Agency on September 13th, currently developing the remaining phases of South Pars has been sealed with domestic companies and no room for Total to take a new project anymore.

French Foreign Minister Laurent Fabius discussed returning Total to Iran’s oil and gas projects with Iran’s Oil Minister Bijan Namdar Zanganeh during his visit to Tehran on July 29. 

Iran sets gas price for petrochemical plants at $130 per 1000 cm

The Iranian oil ministry has set the gas price for petrochemical plants at $130 per 1000 cubic meters, Abbas Shari Moghadam. Deputy Petroleum Minister & National Petrochemical Company’s President announced on September 12th.

He said that a cubic meter of gas as feeding for petrochemical plants was priced at 13 cent, while as fuel consumption was set at 4 cent.

Iranian petrochemical plants production capacity is about 60 million tons per annum (MT/a), but the volume stood at 40 MT/a in 2013, a year after imposing western sanctions on the country.

In November 2013, western countries lifted petrochemical sanctions on Iran and the country’s production level increased to 44 MT. Iran planed to boost the volume to 50 MT in 2015.

Iranian petrochemical plants consumes about 35 mcm/d to 37 mcm/d of gas.

Iran, Azerbaijan start new oil cooperation 

National Iranian Oil Company (NIOC) and State Oil Company of the Azerbaijan Republic (SOCAR) began a fresh round of negotiation to explore and develop new oil and gas fields in the Caspian Sea, the Mehr News Agency reported on September 11th. 

According to the report, an oil delegation of Khazar Exploration and Production COmpany (KEPCO), a subsidiary of NIOC, has held negotiations with SOCAR experts and executives in Baku, Azerbaijan. 

Khoshbakht Yusifzadeh, the First Vice-President of the SOCAR, welcomed visiting experts and executives of KEPCO and highlighted how working on energy potentials can help Iran and Azerbaijan flourish their economy. 

Turning to the opportunity available to the two countries to explore and develop oil and gas fields, Yusifzadeh pressed the necessity and importance of continued negotiation between the two sides to make the best use of the cooperation opportunity at hand. 

Also, according to Yousef Etemadi, the KEPCO managing director, bilateral negotiations mainly focused on executive issues related to exploration and development of gas and oil fields located in the Caspian Sea and the future of oil cooperation between Iran and Azerbaijan in view of their presence in the Caspian Sea. 

To Etemadi, some possible cooperation fields for Iran and Azerbaijan are joint use of advanced softwares in oil and gas industries and regional kinetic studies. 

Already in August, Iranian Oil Minister Bijan Namdar Zanganeh held negotiation with Azerbaijani Minister of Economy and Industry Shahin Mustafayev to boost oil and gas cooperation. 

There are plenty of grounds for the two country to cooperate, inter alia, developing Shah Deniz gas field and joint fields in the Caspian Sea, and gas export. What bring the two countries even closer together, are massive oil and gas resources they are sitting on and also, their hands-on experience of oil exploration, production, and export. 

Iran increases gas delivery to power plants

Iran increased gas delivery to power plants by 11 percent to 193 mcm/d during 160 days of current fiscal year, started on March 21.

During this period some 30 billion cubic meters (bmc) of gas was delivered to this sector, while housing and industrial sectors consumed 24 bcm and 14.415 bcm of has respectively.

Iran plans to increase daily raw gas production to 700 mcm during the current fiscal year.

Azerbaijan

Azerbaijan, Russia signed 2 bcm/a gas deal

Azerbaijan's methanol production plant AzMeCo Company has signed an agreement on purchase of up to 2 billion cubic meters of gas per year from the Russian Gazprom export company, Gazprom reported on September 11th.

In July, SOCAR President Rovnag Abdullayev told journalists that SOCAR has allowed Gazprom Company to supply gas to AzMeCo Company.

Italian company to inspect welding work on SCP

Italian RINA Services signed a major 30-month contract with Saipem / Azfen consortium to conduct the technical inspection of welding work on the South Caucasus gas pipeline (Baku-Tbilisi-Erzurum), RINA Services said.

According to the report, the contract covers a 487 km section of the pipeline, Trend reported on September 11th.

"The contract envisages the inspection and testing of welding work at a 424-kilometer Azerbaijani section and a 63-kilometer Georgian section of the gas pipeline,” a statement said. “It also includes the installation of valves, scraper acceptance and start-up units and attached systems. Two teams of specialists in Azerbaijan and Georgia will conduct the work on the visual, radiographic, ultrasonic and magnetic testing."

RINA opened an office in Azerbaijan in 2014 and in Georgia in 2015.

This Italian company annually certifies about 20,000 welders and 1,100 welding procedures for major engineering and construction companies in the world.

Some 4.2 billion cubic meters of gas were transported via the South Caucasus gas pipeline in January-July compared to 3.6 billion cubic meters, transported over the same period in 2014.

The length of the Baku-Tbilisi-Erzurum gas pipeline is more than 700 kilometers. The gas produced at Shah Deniz gas-condensate field in the Azerbaijani sector of the Caspian Sea is supplied via this gas pipeline. Gas is supplied to Georgia and Turkey.

SOCAR plans to increase gas supply to Georgia

The State Oil Company of Azerbaijan intends to bring the level of gas supply to Georgia to 82 percent, Mahir Mammadov, director general of SOCAR Energy Georgia company told Trend.

In accordance with the agreement signed with Georgian government, SOCAR Georgia Gas (subsidiary of SOCAR Energy Georgia) was supposed to supply gas at least to 150,000 new (prospective) users and invest at least $40 million in this process.

However, the period of validity of the gas supply program was extended, as the volume of investments exceeded the previously planned amount.

“The process of gas supply to Georgia continues. Currently, a new 3-year investment program is in force,” said Mammadov.

“Our operating activities cover 90 percent of Georgia’s territory, albeit it is only 45-48 percent on the customer base,” he added.

“To date, the gas supply level of Georgia is 65-67 percent for real customers and 73-74 percent for prospective customers,” he said, adding that it is a very high figure.

Earlier, SOCAR Georgia Gas said that it is planned to increase the number of users in Georgia to 480,000 by late 2015.

SOCAR and the Georgian government signed an agreement to transfer control of 30 gas distribution facilities and gas distribution networks covering such regions of Georgia as Kakheti, Mtskheta-Mtianeti, Shida and Kvemo Kartli, Adjara, Guria, Imereti, Samegrelo on December 26, 2008.

The list of gas distribution facilities was then expanded. Earlier, all these facilities were eliminated and seven regional gas facilities were created under SOCAR.

Uzbekistan

Korean Eximbank may finance projects of Lukoil in Uzbekistan

Russian company Lukoil may attract loans of Export and Import Bank of South Korea to finance its projects in Uzbekistan, he Russian oil company’s president, Vagit Alekperov explained in an interview with Vedomosti newspaper.

He said that the Russian bank is holding active negotiations with the Eximbank of South Korea to finance projects of Lukoil in Uzbekistan.

Alekperov underlined that the negotiations are difficult. He expressed hope that the decision will be adopted and the financing for the project will be provided.

Earlier, Vagit Alekperov said that LUKOIL is ready to attract the South Korean banks to financing of a project on developing Kandym group of fields in Uzbekistan.

Currently, LUKOIL implement three product-sharing agreements in Uzbekistan – Kandym-Khauzak-Shady-Kungrad, Southern-Western Gissar and exploration of the Uzbek part of Aral. So far, LUKOIL produced over 20 billion cubic meters of gas in Uzbekistan.

The company will produce about 17-18 billion cubic meters of gas a year in Uzbekistan by 2020.

LUKOIL investments in exploration, production of gas in Uzbekistan increase

The Lukoil Russian oil company increased investments in exploration and production of gas in Uzbekistan by 64.8 percent in the first half of 2015 compared to the same period in 2014, namely from $301 million to $496 million, said the company on September 8th.

In the second quarter of 2015, investments of the Russian company in Uzbekistan amounted to $336 million against $168 million during the second quarter of 2014 (a 2 times increase).

In January-June, Lukoil increased gas production in Uzbekistan by 24.8 percent - up to 78,400 barrels of oil equivalent.

LUKOIL in Uzbekistan operates under a production sharing agreement for Kandym-Khauzak-Shady block, which provides natural gas production in the Bukhara-Khiva region in southwest Uzbek