Greater Caspian Weekly Overview - November 26th 2015
IRAN
Iran’s oil minister explains GECF challenges
Iran’s Oil Minister Bijan Namdar Zanganeh responded to Natural Gas Europe’s questions at a press conference following the Third GECF Gas Summit on the main challenges of the Gas Exporting Countries Forum (GECF) members.
“Gas exporters will always have price concerns and will keep on competing with each other. Meanwhile, in the global market the issue of long-term contracts with fixed prices is going to be abandoned…Although oil markets are open in some parts of the world and are operated by stock markets in some other points and despite the fact that countries can affect prices through supply and demand, but the market will finally set the oil price. Characteristics and conditions in the gas market are rapidly changing to become similar to those of the oil market. Moreover, competing with other energy carriers, coal in particular, is among the challenges facing the gas producing countries.”
The Iranian Oil Minister said it is too early for GECF to play a role in global gas pricing.
Iran to boost gas output to 1 billion cubic metres within 2 years
Iran will boost its gas output to 1 billion cubic metres (bcm) per day within the next two years, Iranian President Hassan Rouhani said.
Iran’s current raw gas output stands at 700 million cubic metres (mcm) per day.
President Rouhani made the remarks during his inaugural address to the third summit of the Gas Exporting Countries Forum (GECF) in Tehran on November 23.
He stressed the need to pay due attention to energy within the framework of sustainable development.
Elsewhere in his remarks, the president said that, "Energy markets are phenomena which are dynamic by nature and the natural gas market is no exception.”
Iran drills more oil and gas wells
Iran’s National Iranian Drilling Company (NIDC) has drilled 123 offshore and onshore oil and gas wells in the first eight months of the current Iranian fiscal year, which started on March 21, 2015.
Mehran Makvandi, deputy managing director of NIDC, said 22 more wells were drilled compared to the same period in the past year.
NIDC operates 74 offshore and onshore drilling rigs in 10 provinces of the country.
Iran in talks for 5 LNG projects
Iran is negotiating to launch five LNG projects within the next three years, a move that aims to increase its share of the global market.
Managing director of the National Iranian Gas Company (NIGC) Hamid-Reza Araqi said that negotiations for exporting gas to five neighboring countries are underway.
He didn’t mention company names, but Iran already has a contract with German Linde company to build “Iran LNG” project, which has been developed by 50 percent. Iran LNG is projected to produce 10.5 million tonnes liquefied gas per year by 2017.
He added that Iran’s gas production capacity will reach 330 billion cubic metres (bcm) per year by 2017. Consequently, it will be possible to increase the volume of gas exports, he noted.
Germany’s IBS to sign deal with NIGC to improve Iran's gas safety
German company IBS is negotiating to sign a deal with the National Iranian Gas Company (NIGC) on improving safety across Iranian gas industry’s facilities.
Mohammad-Reza Yousefipour, the director of the environmental, health and safety (EHS) department for NIGC's Gas Engineering and Development Company said that the negotiations were about signing a deal to improve safety across the Iranian gas industry’s facilities.
The German company has agreed to present its technical and price offers within the next month, he added.
Iran plans to become gas hub in the region
It is possible to create a gas hub in Iran to act as a reference for pricing gas in the region, Iran's Oil Minister Bijan Namdar Zanganeh said on November 23.
He made the remarks in a meeting with Russian Energy Minister Alexander Novak in Tehran.
"However, this issue is time-consuming," the minister said. "Moreover, software and 'brain-ware' prerequisites should be provided."
Moving toward short-term and single-consignment contracts is a must, because price changing is not possible in long-term contracts, Zanganeh added.
Earlier this month, on November 17, the minister said that Iran will be negotiating natural gas swap projects with Russia, Turkmenistan, and Azerbaijan.
Iran to unveil programme on reducing greenhouse gas emissions at COP21
Iran will introduce its national programme on reducing greenhouse gas emissions at the annual Conference of Parties (COP) on climate change, which will be held in Le Bourget, France, from 30 November to 11 December.
Masoumeh Ebtekar, the head of Iran’s Department of Environment, said Iran will put forward its plans for participation in the global drive to reduce greenhouse gas emissions.
Gas Exporting Countries Forum (GECF) members produced more than 3,532 million tons of CO2 in 2012, sharing about 11% of global CO2 emissions. Iran shares about 17 percent of GECF members’ CO2 emissions, while Russia’s share is about 50 percent.
Iran negotiates to export LNG via Oman
Iranian Oil Minister Bijan Namdar Zanganeh and Oman's Minister of Oil and Gas Mohammed Al Rumhy have discussed ways to use Oman’s facilities to export Iranian LNG.
Alireza Kameli, the director of the National Iranian Gas Exports Company, said that the ministers also discussed both offshore and onshore possibilities for exporting Iranian gas to Oman, adding that offshore studies are being carried out.
Currently, 23% of Oman’s capacity for LNG production is unused. Iran plans to use this capacity to export LNG in return for paying the costs of turning natural gas into LNG. Right now the idle capacity is about 1.5 million metric tons per year.
U.S. entry to global gas market could threaten GECF
The entry of the U.S. to the global gas market can be a threat to the Gas Exporting Countries Forum (GECF), said Nigerian Minister of Petroleum Resources Emmanuel Ibe Kachikwu.
“Certainly, any rise in production will be a treat. We should wait and see how long can the U.S. remain in the market.”
Kachikwu, who chaired the 17th Ordinary Ministerial Meeting of the GECF in Tehran, said that gas production costs are low in the U.S. and huge investments have been made in this sector. “The U.S. is considered as a good traditional market.”
Mohammad-Hossein Adeli, the secretary general of the GECF, addressed the meeting, saying that some European and Asian countries are the destinations for U.S. gas. Some other countries, like Australia and east African countries will also join the gas exporters.
The U.S. announced on Nov.23 that this country’s natural gas proved reserves rose 10% in 2014, setting a new U. S. record of 11 trillion cubic meters. The U.S. production of natural gas increased 6% (rising from approximately 2 billion cubic meters per day).
GECF reelects Iran’s Adeli as secretary general
Iran’s Mohammad-Hossein Adeli was reappointed as the secretary general of the Gas Exporting Countries Forum (GECF) for another two years.
He had been appointed in this position in the 15th Ministerial Meeting (Tehran, November 3, 2013) for the period of 2014-2016, according to the GECF website.
This appointment takes place upon nomination by member countries.
Adeli assumed office as secretary general of the GECF on January 1, 2014 for a period of two years in accordance with the Statute.
Iran: Gas transit from Caspian Sea to Persian Gulf not economically justified
Transit of gas from Caspian Sea to Persian Gulf countries is not currently economically justified, Iran’s Oil Minister Bijan Namdar Zanganeh said.
Referring to the latest situation of swapping or transiting gas from Turkmenistan to Oman via Iran, he said that most of talks with Turkmenistan were related to the swap of natural gas.
Zanganeh said on November 17 that Iran will be negotiating natural gas swap projects with Russia, Turkmenistan, and Azerbaijan.
“We are exporting gas nearly as much as we are importing," he said. "Of course, we need to import in the long run. But, we want to have mutual import and export with countries, like Turkmenistan in order to buy from us goods in return for importing gas.
“Our priority is to export gas to the neighboring countries. We are willing to export gas to Iraqi Kurdistan,” he added.
AZERBAIJAN
Azerbaijan joins GECF as observer member
Azerbaijan joined the Gas Exporting Countries Forum (GECF) as an observer member.
The country’s observer status was declared in the 17th ordinary ministerial meeting of the GECF, which was held in Tehran on November 2.
Iraq, Kazakhstan, the Netherlands, Norway, Oman and Peru have already the status of observer members in the forum.
SOCAR gas export price was $160.46 per 1,000 cm this year
SOCAR exported its gas at an average price of $160.46 per 1,000 cubic metres from January to October 2015, a state body has reported. Azerbaijan exported a little more than 6.760 billion cubic metres (bcm) of gas, down 2.7% against the same period in 2014, the State Customs Committee of Azerbaijan Republic said.
According to the report, SOCAR's gas export reached more than 1.163 bcm in volume and $186.717 million in value during the first 10 months of the year. SOCAR sold that gas at an average of $160.46 per 1,000 cubic metres.
SOCAR gas production decreases
According to a new report released by the State Oil Company of Azerbaijan (SOCAR) on November 24, the country’s total gas production decreased from 2.423 bcm in September to 2.556 bcm in October.
Around 24 bcm of gas were produced in Azerbaijan from January-October 2015, about 6 percent less than the same period last year.
SOCAR produced 5.756 bcm of gas during this period.
Azerbaijan produced 29.62 bcm of gas in 2014 compared to 30.78 bcm in 2013.
CENTRAL ASIA
KAZTRANSGAS launches new pipeline 5 months ahead of schedule
KazTransGas has officially launched Kazakhstan's newest gas pipeline, the Beineu-Shymkent-Bozoi gas pipeline. The launch comes five months ahead of the project's scheduled launch date.
The construction of the pipeline, which is included in the country's state program for accelerated industrial-innovative development, makes it possible to transit a stable supply of gas from the country's western gas fields to the south of the country.
"Commissioning of the pipeline is historic in its significance, because it combined all gas pipelines of the country into a single gas transportation system," chairman of the Board of KazTransGas, Kairat Sharipbayev, said. "That allows us to diversify gas transportation through the territory of Kazakhstan in any direction, and completely eliminate the dependence on imported gas."
The new pipeline will ensure KazTransGas can continue to implement the Head of State's aims of increasing the transit capacity and transport of energy resources, he added.
UAE's Dragon Oil eying investment in TAPI
Dubai-based oil and gas company, Dragon Oil, is in talks to invest in a pipeline that would deliver natural gas from Turkmenistan to India. The pipeline project has received a potential boost after many western oil companies failed to secure a role, reports International Business Times.
Faisal Rabee Al Awadhi, general manager for Dragon Oil in Turkmenistan, said that his company's discussions with regards to the TAPI project, which could cost $10bn, had been ongoing for a long time. "But now it's very serious, things have been signed between the countries. That's why we have shown our interest to go in."
Currently, Turkmenistan's state company, Turkmengas, which has been named the project leader owns 85% stake in the project. Afghanistan, Pakistan and India own 5% each, according to the deal initialled in October.
The project that has been under discussion since the 1990s will start seeking financing in 2016. Turkmengas could sell up to 34% stake in exchange for the investment, according to The Financial Times. Al Awadhi said that the size of the potential stake had not yet been determined.
The deal could also include investments from companies based in Japan and Korea.
Uzbekistan to implement investment projects worth $16.9B
President of Uzbekistan Islam Karimov signed a resolution “On measures to implement the agreements reached during the International Investment Forum in Tashkent,” according to which in 2016-2017 it is planned to start the implementation of new projects with a total value of $16.9 billion.
In total, in the coming two years it is scheduled to begin implementation of 317 investment projects on modernization, technical and technological renewal of production.
In particular, in the energy sector of Uzbekistan it is planned to implement 53 projects worth $10.37 billion. These included the construction of the fourth line of the Uzbek section of the Central Asia-China gas pipeline, a new thermal power plant with a total capacity of 900 MW in the Namangan region, construction of the complex for the production of olefins in the Bukhara region of Uzbekistan.
Of the total number of signed documents, as many as 35 documents worth $9.4 billion were signed regarding projects and enterprises in the fuel and energy sector - oil and gas, oil and chemical, as well as chemical industries.