Total to sign $4.8 bn gas deal with Iran : oil ministry

Published by 24matins.uk with AFP, on 02 July 2017, 11h15

24matins.uk 

Iran is seeking foreign investment and technology to develop South Pars, one of the world’s largest natural gas fields

French energy giant Total is to sign a $4.8 billion agreement to develop an Iranian offshore gas field, the oil ministry said Sunday, in the biggest foreign deal since sanctions were eased.

“The international agreement for the development of phase 11 of South Pars will be signed on Monday in the presence of the oil ministry and managers of Total, the Chinese company CNPC and Iranian company Petropars,” a ministry spokesman told AFP.

Total signed a preliminary deal with Iran in November as the lead partner alongside China National Petroleum Corporation (CNPC) and Iran’s Petropars.

The French company will operate the site with a 50.1 percent stake in the $4.8 billion (4.2 billion euro) project.

CNPC will own 30 percent and Petropars 19.9 percent.

The French firm was initially due to sign the contract in early 2017, but CEO Patrick Pouyanne said in February that it would wait to see whether the US administration of President Donald Trump reimposed sanctions on Iran.

Trump threatened during his campaign to tear up a landmark accord between Iran and six world powers which came into force in January 2016, which eased sanctions in exchange for curbs to Tehran’s nuclear programme.

But he has softened his stance since taking office, with his administration continuing to waive the sanctions every few months as required under the deal.

However, Washington has imposed new measures targeting Iran’s missile programme and activities in the region.

The 20-year phase 11 project will eventually pump 50.9 million cubic metres (1.8 billion cubic feet) of gas per day into Iran’s national grid.

It marks a breakthrough in the oil ministry’s efforts to attract Western investment and know-how to improve its outdated energy infrastructure.

Credit : © AFP ATTA KENARE

 

 

Total signs major Iran gas deal, defying US pressure

July 4, 2017 EHRAN: French energy giant Total defied US pressure on Monday by signing a multibillion-dollar gas deal with Iran, the first by a European firm in more than a decade.

Total will invest an initial $1 billion in the South Pars offshore gas field as part of a consortium with Chinese and Iranian firms.

The 20-year project, which will eventually see the firms inject $4.9bn, is by far the biggest vote of confidence in the Islamic republic since sanctions were lifted under a 2015 nuclear deal with world powers.

“Today, for Total, is a historic day, the day we come back to Iran,” Total CEO Patrick Pouyanne said at the signing ceremony in Tehran.

“We aren’t a political organisation, but I hope this agreement will encourage other companies to come to Iran because economic development is also a way of building peace,” he told AFP. “We are here to build bridges, not walls,” he added.

The project in South Pars, a field shared between Iran and Qatar, is the first under a new Iranian Petroleum Contract which offers better terms to foreign investors but has faced intense criticism from hardliners who said it was too generous.

Oil Minister Bijan Namadar Zanganeh said the deal was a direct result of moderate President Hassan Rouhani’s resounding re-election victory in May and strong public support for rebuilding ties with the West.

“The people said firmly that our oil policies should continue,” he said. “We shall never forget Total being the forerunner.”

Zanganeh said Iran’s oil industry needs some $200bn in investment over the next five years, and European firms have been hungrily eyeing opportunities in a country with the world’s second-largest gas reserves and fourth-largest oil reserves.

But they have been cautious about investing due to continuing US sanctions.

Total has appointed a compliance officer with the sole task of ensuring it does not fall foul of US measures against Iran.

In particular, it must prevent cash flowing to Iran’s elite Revolutionary Guards — a tall order given their extensive and shadowy presence across the Iranian economy.

Just a fortnight ago, the US Senate overwhelmingly passed a bill targeting the Guards over their involvement in regional conflicts and the country’s ballistic missile programme.

The White House is also in the midst of a 90-day review on whether to abandon the nuclear deal entirely, which President Donald Trump threatened to do during his election campaign.

The uncertainty has been enough to deter global firms such as BP from dipping their toes in Iranian waters, while Shell and Russia’s Gazprom have signed only preliminary deals to date.

‘US HOSTILITY’: Even without the threat of sanctions, investing in the Iranian economy is not for the faint-hearted.

Foreign firms in Iran still face “pervasive corruption… high levels of red tape; potential for currency instability (and) reluctance to allow foreign involvement within the domestic economy,” consultancy firm BMI Research wrote in a briefing note Monday.

For all that, Iran’s large population of middle-class consumers presents an irresistible opportunity for many businesses in Europe and beyond.

Any attempt to scupper the nuclear deal will likely face major push-back from its other signatories: Britain, France, Germany, China and Russia.

Foreign Minister Mohammad Javad Zarif was warmly received by EU leaders last month and tweeted that they were committed to the nuclear deal “despite reckless US hostility”.

At the signing on Monday, Pouyanne said “Total has a long history in Iran,” pointing to its development of phases two and three of South Pars in the 1990s.

It will take a 50.1 percent stake in the new phase 11 project, while China National Petroleum Corporation (CNPC) will own 30pc and Iran’s Petropars 19.9pc.

The aim is to start pumping into Iran’s domestic grid in 2021, eventually reaching 56.6m cubic metres (2bn cubic feet) of gas per day.

Iranian officials said the products would be worth a total of $54bn at current prices.

Total had signed up to develop phase 11 back in 2009 but was forced to abandon its Iranian projects in 2012 when France joined European Union partners and imposed sanctions, including an oil embargo.

Published in Dawn, July 4th, 2017

Iran to sign gas deal with France’s Total and China’s CNPC

Iran says French energy giant Total is to sign a contract worth close to $5bn (£3.8bn) to develop an offshore gas field in the Gulf.

It is the biggest foreign deal since most economic sanctions against the country were lifted in 2016.

Oil ministry officials said the deal to develop the South Pars gas field would be signed on Monday in Tehran, with Total getting a 50.1% stake.
China’s CNPC would hold a 30% stake and Iran’s Petropars 19.9%.

Total was planning to sign the contract several months ago, but decided to wait and see if the Trump administration in the US would re-impose sanctions on Tehran.

What lifting Iran sanctions means for world markets

The offshore field, which is shared between Iran and Qatar, was first developed in the 1990s.

Total was one of the biggest investors in Iran before international sanctions were imposed in 2006 over suspicions the country was trying to develop nuclear arms.

Last month Total’s boss Patrick Pouyanne indicated the firm was ready to make an initial $1bn investment in Iran, the third largest producer in oil body Opec.

Iran raises oil exports to West, almost on par with Asia

Exclusive OPEC-OIL/ REUTERS/Raheb Homavandi

By Nidhi Verma | NEW DELHI

Iran’s oil exports to the West surged in May to their highest level since the lifting of sanctions in early 2016 and almost caught up with volumes exported to Asia, a source familiar with Iranian oil exports said.

Iran, which used to be OPEC’s second biggest oil exporter, has been raising output since 2016 to recoup market share lost to regional rivals including Saudi Arabia and Iraq.

While many Asian nations continued to purchase oil from Iran during sanctions, Western nations halted imports, halving Iran’s overall exports to as little as one million barrels per day (bpd).

Last month, Iran exported about 1.1 million bpd to Europe including Turkey, almost reaching pre-sanction levels and only slightly below the 1.2 million bpd supplied to Asia, the source told Reuters.

Iran’s exports to Asia last month were the lowest since February 2016, Reuters’ calculations showed.

Oil exports to Asia fell as South Korea and Japan stepped up oil condensate purchases and bought less oil, said the source, who asked not to be identified as the information is confidential.

“Iran’s condensate parked in floating storage has almost been exhausted because of higher purchases by Japan and Korea,” the source said.

Exports to Asia were also hit by India’s decision to cut annual purchases from Iran by a fifth for the fiscal year to March 2018.

After the lifting of sanctions, Tehran added new clients such as Litasco and Lotos and won back customers such as Total (TOTF.PA), ENI (ENI.MI), Tupras (RDSa.L), Repsol (REP.MC), Cepsa CPF.GQ and Hellenic Petroleum (HEPr.AT).

OPEC member Iran was allowed a small production increase under a December deal to limit output.

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Iran’s overall May oil production totaled 3.9 million bpd, the source said.

Iran is currently producing about 200,000 bpd of West Karoun grade, which the nation blends with other Iranian heavy grades for export, he said.

For a graphic on Asia’s Iranian crude oil imports, click here

For a graphic on Iranian oil production, click reut.rs/2sbpbWY

(Editing by Jason Neely and David Evans)

Iran signs first major post-election oil deal

Wed May 24, 2017

The National Iranian Oil Company (NIOC) has signed an agreement with a Spanish-Iranian consortium over the production of corrosion resistant pipes used in the oil industry.

The agreement was reported by media to be worth $615 million – or €550 million. It was the first major agreement

that the country signed after the re-election of President Hassan Rouhani.

The consortium, which includes Spain’s Tubacex S.A. and Iran’s Foolad Isfahan Company, will produce pipes made of a corrosion resistant alloy (CRA) for a network of 600 kilometers, or about 370 miles, over three years.

The pipes will be produced using Japan’s JFE Steel Corporation technology, and that the know-how will eventually be given to the Iranians, AP reported.

Ali Kardor, the managing director of the National Iranian Oil Company (NIOC), was quoted as saying by the domestic media that the agreement would make Iran the only country to achieve the technology to produce CRA pipes.

Kardor added that several plants would be set up in Iran over the next few years to produce such pipes, IRNA reported.

At a ceremony marking the signing, Iran’s Petroleum Minister Bijan Zanganeh said he was “delighted that a deal worth more than €550 million is being signed.”

“The Iranian manufacturer is happier than us and perhaps our foreign partner is the happiest party of all today, to have secured itself a long-term market in Iran,” AP quoted Zanganeh as saying.

The minister added that during the years of punitive sanctions over Iran’s nuclear program, the industry faced a severe shortage of pipes and were the sanctions still in place, “we would be unable to produce them now.”

“I think it is the biggest tender we have had in this industry for a lot of years,” said Antonio Rafael, deputy CEO of Tubacex. “It is very professionally managed.”

The agreement was reported by media to be worth $615 million – or €550 million. It was the first major agreement that the country signed after the re-election of President Hassan Rouhani.

The consortium, which includes Spain’s Tubacex S.A. and Iran’s Foolad Isfahan Company, will produce pipes made of a corrosion resistant alloy (CRA) for a network of 600 kilometers, or about 370 miles, over three years.

The pipes will be produced using Japan’s JFE Steel Corporation technology, and that the know-how will eventually be given to the Iranians, AP reported.

Ali Kardor, the managing director of the National Iranian Oil Company (NIOC), was quoted as saying by the domestic media that the agreement would make Iran the only country to achieve the technology to produce CRA pipes.

Kardor added that several plants would be set up in Iran over the next few years to produce such pipes, IRNA reported.

At a ceremony marking the signing, Iran’s Petroleum Minister Bijan Zanganeh said he was “delighted that a deal worth more than €550 million is being signed.”

“The Iranian manufacturer is happier than us and perhaps our foreign partner is the happiest party of all today, to have secured itself a long-term market in Iran,” AP quoted Zanganeh as saying.

The minister added that during the years of punitive sanctions over Iran’s nuclear program, the industry faced a severe shortage of pipes and were the sanctions still in place, “we would be unable to produce them now.”

“I think it is the biggest tender we have had in this industry for a lot of years,” said Antonio Rafael, deputy CEO of Tubacex. “It is very professionally managed.”

Iran security body reviewing new IPC oil contracts

REUTERS/Heinz-Peter Bader Apr 9, 2017

DUBAI (Reuters) – Iran’s top security body is still reviewing the Iran Petroleum Contract (IPC) model, Oil Minister Bijan Zanganeh was quoted as saying on Sunday, as the contracts aimed at attracting foreign investors appear to face fresh delays.

In January, Iran named 29 companies from more than a dozen countries as being allowed to bid for oil and gas projects under the IPC, which Tehran hopes will boost production after years of sanctions.

But the IPC model has been delayed several times due to opposition from hardline rivals of President Hassan Rouhani.
“The new oil contracts (IPCs) are currently being reviewed by the Supreme National Security Council,” Zanganeh told parliament, the students’ news agency ISNA reported.

Zanganeh did not elaborate or say how long the review might take, ISNA and other agencies reported.

The IPC model ends a buy-back system dating back more than 20 years under which Iran did not allow foreign firms to book reserves or take equity stakes in Iranian companies.

Oil majors have said they would only go back to Iran if it makes major changes to the buy-back contracts, which companies such as France’s Total or Italy’s Eni have said made them no money or even incurred losses.

The IPC has more flexible terms that take into account oil price fluctuations and investment risks, a senior Iranian oil official told Reuters in November.

(Reporting by Dubai newsroom; editing by Alexander Smith)

Iran struggles to expand oil exports as sea storage cleared

By Jonathan Saul/Apr 6, 2017

LONDON (Reuters) – Iran has sold all the oil it had stored for years at sea and Tehran is now struggling to keep exports growing as it grapples with production constraints, shipping and oil sources say.Since the easing of international sanctions in January 2016, Iran tried to make up for lost sales by releasing millions of barrels parked on tankers offshore.

Tanker tracking and oil sources said Iran had sold its last stocks from the floating storage in the past two weeks. Much of the oil stored was condensate, a very light grade of crude. With no more stocks at sea, Iran has lost a vital resource that had propped up exports.

“We do think that (floating storage) has been the primary cause of the boost in exports,” Energy Aspects analyst Richard Mallinson said, adding that now floating storage had ended total exports of crude and condensate were likely to slip. “We see a very difficult path for Iran to raise crude output until it can get the Western expertise and investment back into the upstream, which has been notably slow to materialize,” he added.

After Western sanctions were eased, Iran’s output jumped from about 2.9 million barrels per day (bpd) to about 3.6 million bpd in June.

But it has barely risen since – fluctuating between 3.6 million and 3.7 million bpd – even though Iran fought hard with fellow OPEC members to be excluded from production cuts that came into effect on Jan. 1 and will last till June.

The Organization of the Petroleum Exporting Countries pledged to reduce output by about 1.2 million bpd, but Iran was allowed a small increase to compensate for years of isolation. Yet it has produced less in the past three months than it was allowed.

Iranian Oil Minister Bijan Zanganeh said last month Tehran was prepared to produce 3.8 million bpd if OPEC agreed to extend cuts to the second half of 2016, effectively signaling there was little hope of a steep rise in Iranian output.

NEED FOR INVESTMENT

Prior to the lifting of sanctions, Iran stored unsold oil on ships, which peaked in 2015 at 40 million barrels on around 25 tankers. The country has up to 60 oil tankers in its fleet.

Iran’s drawdown of floating storage gathered pace in September. By the start of 2017, Iran still held an estimated 16 million barrels of oil on ships. Since then, they have emptied.

While the EU and United Nations lifted sanctions on Iran over its nuclear program more than a year ago, the United States has held separate measures in place and President Donald Trump’s administration has promised a tough line. This has increased concerns among Western banks about offering finance to Iran, slowing energy investment decisions. French oil company Total said in February it planned a final investment decision on a $2 billion gas project in Iran by the summer, but said this hinged on a renewal of U.S. sanctions waivers.

“The uncertainty over the U.S. position on further sanctions is casting a huge shadow on the oil trade with Iran,” said Paddy Rodgers, chief executive of tanker company Euronav. In addition, the oil minister’s efforts to secure deals with Western firms has run into internal opposition in Iran, which holds the world’s fourth biggest oil reserves. The plans have now been postponed until after a May presidential election.

“Iran needs billions of dollars of investment to boost crude oil production and natural gas capacity,” said Mehdi Varzi, a former official at state-run National Iranian Oil Company and now an independent consultant.

“Most of the fields were discovered many decades ago and are way beyond their production capacity,” he said.

(Editing by Dmitry Zhdannikov and Edmund Blair)

U.S. granted BP licence to operate joint North Sea field with Iran

BUSINESS NEWS | Thu Apr 6, 2017 | 2:06pm BST

BP (BP.L) and Iran’s state-run oil company received a licence from the U.S. Treasury last year to operate their joint gas field in the North Sea following the lifting of Western sanctions on Tehran, BP said on Thursday.

Production at the Rhum field was suspended in 2010 when Europe imposed sanctions on Iran over its nuclear programme and only resumed four years later after Britain agreed to set up a temporary management scheme whereby all revenue due to Tehran would be held until sanctions were lifted.

Following the removal of European Union and United Nations sanctions on Iran in January 2016, the temporary management scheme ceased.

Iran regained control of its stake and on Sept. 29, 2016 BP obtained a licence from the U.S. Treasury, through its sanctions enforcement arm – the Office of Foreign Asset Control (OFAC), to continue operations at the field, BP said in its 2016 annual report.

BP, which was founded more than a century ago as the Anglo-Persian oil company, has multiple business operations in the United States and therefore needs an OFAC licence to avoid potential breaches of existing U.S. sanctions.

Last year BP created an executive committee to explore business in Iran, which would exclude its American chief executive Bob Dudley in a bid to avoid potential sanctions violations.

London-based BP recorded a net profit of $31.6 million (25 million pounds) in 2016 from its 50 percent stake in the field, which supplies around 4 percent of Britain’s gas demand.

“BP currently intends to continue to hold its ownership stake in the Rhum joint arrangement and act as operator,” it said in the annual report.

While international sanctions on Iran were removed more than a year ago, the United States has held separate measures in place and President Donald Trump’s administration has promised a tough line.

BP did not specify for how long the Rhum field licence was valid.

Previous U.S. President Barack Obama tried to encourage non-U.S. companies and non-U.S. banks to increase trade with Iran, although Tehran said Washington did not do enough to ease its access to international financial markets and banks for vital capital after years of isolation.

(Reporting by Ron Bousso and Jonathan Saul; Editing by Toby Davis)