Caspian Brief, June 19, 2017
Iran, EAEU finalize accord on free trade zone
The two sides will observe the basic principles of World Trade Organization and create the proper conditions for trading all goods in the framework of commerce collaborations, the EAEU press office reported. Iran and the EAEU negotiated for 18 months for creating the free trade zone, during which Iran’s ICT Minister Mahmoud Vaezi and Minister for Trade of the Eurasian Economic Commission examined the different dimensions of the agreement.
The EAEU is an economic union of states located primarily in northern Eurasia. It provides for the free movement of goods, services, capital and labor within the member states. Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia are the current member states of the union, with a combined GDP of $2.2 trillion, $ 3.1 trillion of industrial products, and $ 877 billion trade with non-member countries, equal to 7.3 percent of world export and 3.2 percent of world import.
Uzbekistan set to triple capacity of gas storage facilities
Uzbekistan plans to increase the capacity of its largest gas storage facility by several times to improve gas supplies for Uzbek households in autumn and winter, the government-affiliated news agency Podrobno.uz reported on 19 June citing the Uzbekneftegaz national oil and gas company.
The gas holding capacity of Gazli – the largest underground gas facility in Uzbekistan – will be increased from present 3bn cu.m to 10bn cu.m of natural gas, the report said, adding that the Xojaobad underground gas storage facility in eastern Fargona Region was also expected to be expanded.
These measures are part of the work to prepare the gas transport system for uninterrupted supply of gas to the population during the autumn-winter period, the report said quoting the company’s spokesman as saying.
The news comes a few days after reports of the Uzbek energy giant’s plans to increase supplies to China and possibly start exporting gas to Europe in the future.
One 14 June, Uzbekneftegaz’s chief Alisher Sultonov said that his company was planning to increase China gas supplies to 10bn cu. m. a year, under a three-year agreement signed during President Shavkat Mirziyoyev’s visit to Beijing in May, the Moscow-based Ferghana news agency website reported on 15 June.
No risk for SGC from revival of South Stream
The revival of the Russian-initiated South Stream gas pipeline project poses no risk to the Southern Gas Corridor project, which envisages delivery of Azerbaijani gas to Europe, Charles Ellinas, CEO of Cyprus-based energy consultancy e-CNHC told Trend.
“All agreements on the Southern Gas Corridor are in place, gas sales are secure, the final investment decision (FID) has been reached and construction is on schedule — so the project is going ahead,” said the expert.
Ellinas noted that it remains to be seen how and if the possibility of reviving the South Stream project turns into reality.
“The US is considering applying sanctions on Russian pipelines, but already Germany and Austria responded quite strongly against this, asking the US not to interfere in EU’s energy matters,” reminded the expert.
Earlier, Austrian Der Standard newspaper reported that Austrian energy group OMV and Russia’s Gazprom are considering reviving a gas pipeline project through the Black Sea connecting Russia to central and southern Europe.
However, answering Trend’s question regarding the reported talks, OMV said “we do not comment market rumors in general”.
In December 2014, Russia abandoned the South Stream project in favor of Turkish Stream, which envisages construction of a gas pipeline from Russia to Turkey through the Black Sea. Russia and Turkey signed an intergovernmental agreement on the construction of two offshore strings of the Turkish Stream gas pipeline in October 2016. Each string is estimated to have an annual capacity of 15.75 billion cubic meters of natural gas. The first string will supply gas directly to Turkey, while the second is to be used to deliver gas to European countries through Turkey. Initially, Russia and Turkey planned to build four strings of the pipeline.
Iran names Russian firms to major project
Iran is about to tender its first major oil and gas development project under a new model contract next month.
The National Iranian Oil Company (NIOC) has added four Russian companies and Azerbaijan’s state oil firm Socar to the list of firms qualified for development work in the Islamic Republic.
The addition of Gazprom Neft, Rosneft, Tatneft and Zarubezhneft takes the number of international companies named as eligible to bid for projects in Iran’s massive oil and gas sector to 34.
The updated list comes as Iran’s June 19 deadline for companies to provide details of their planned consortia for the giant Azadegan oil field draws to a close.
Azadegan, discovered in 1999, is the world’s third largest oil field with in-place reserves of about 33.2 billion barrels, about 6 billion barrels of which are recoverable.
According to Iranian officials, invitation letters have been sent out to the prequalified companies to submit their proposals. Those eligible have reportedly been asked to seek NIOC’s approval if they are picking up partners which are not on the list.
Tender documents are said to be distributed next month, marking Iran’s first offering of development projects under the Iran Petroleum Contract (IPC).
Gas deal with Total likely within weeks: Zanganeh
Iran expects to sign a long-delayed gas deal with French oil major Total in the next few weeks, said Oil Minister Bijan Namdar Zanganeh on Saturday.
According to Shana, Zanganeh added, “Iran and Total are summing up the discussions on signing the contract for the development of Phase 11 of South Pars, and this is almost in the final stages.”
He added, “The contract … will be signed before the end of the (current) government.”
Reelected in May, President Hassan Rouhani is expected to form his new cabinet in August.
Total’s CEO Patrick Pouyanne said in late May that the company planned to conclude the South Pars gas deal before summer.
The deal would be based on the new Iran Petroleum Contract (IPC) scheme which has been postponed several times.
The company inked a preliminary agreement with Iran last year.
International firms have been cautious in their dealings with Iran despite the lifting of sanctions early last year out of fears of being blacklisted by the US.
Total became the first Western oil major to sign an energy agreement with Iran after the European Union and the United States undertook to lift sanctions on the Islamic Republic under a nuclear deal signed in July 2015.
The company helped Iran develop phases 2 and 3 of South Pars in the 2000s, before pulling out after Western sanctions were imposed in 2011.
Total resumed trade with Iran in February 2016, and bought about 50 million barrels of crude for about $1.9 billion last year, on top of 11 million barrels of oil products worth $394 million, the company has announced.
The company has said it is interested in more Iranian projects other than South Pars, including an LNG plant which is half complete as well as a multibillion-dollar oil and gas pipeline between Iran and Oman.
Turkey to start building first nuclear plant in 2018
The Turkish subsidiary of Russia’s nuclear energy company Rusatom plans to launch its project to build the first nuclear power plant (NPP) in Turkey next year, Russian news agency Tass reported, citing a statement from the Rosatom State Nuclear Corporation.
Russia and Turkey signed an inter-governmental agreement in 2010 on cooperation in the construction and operation of Turkey’s first NPP. The $20-billion Akkuyu NPP project stipulates building four power units with VVER-1200 reactors and a total capacity of 4,800 MW in the southern Turkish province of Mersin. The plant is estimated to meet around 6-7 per cent of Turkey’s electricity demand.
The project is carried out by Akkuyu Nuclear Company, a subsidiary of Rosatom Energy International, which was granted a 49-year-long electricity generation license from the Turkish Energy Market Regulatory Authority (EMRA) on Thursday.
“After carefully reviewing the bid, the EPDK managing council decided to give the green light to the bid and issued a power generation license to Akkuyu Nuclear Company, valid until June 15, 2066 (49 years),” Rosatom said in a statement.
Akkuyu Nuclear also expects to obtain permissions from the Ministry of Forest and Water Management, the Ministry of Finance and the Turkish Atomic Energy Authority (TAEK) this summer. Those permissions will enable Akkuyu Nuclear to start the construction of auxiliary facilities and other sections of the nuclear power plant not directly related to nuclear power generation.
Main construction works, however, are expected to begin in March 2018, after Rosatom receives the main license.
“In line with the intergovernmental agreement, the first unit is to be put on stream no later than seven years after the Turkish side issues all required permissions,” Rosatom said.
Iran, China to hold naval drills in Strait of Hormuz
Iran’s and China’s navies will hold joint military drills in Strait of Hormuz on June 18, Tasnim news agency reported.
China’s Navy fleet, including Chang Chun destroyer, Chao Hu replenishment ship, Jingzhou guided missile frigate and a helicopter, berthed in Iranian southern port of Bandar Abbas on June 15.
The Chinese fleet is visiting Iran to boost friendly relations between Tehran and Beijing and promote maritime collaboration.
During the upcoming drills, the two parties will display their military capabilities and share experience.
Earlier this month, the Iranian Navy Commander Rear Admiral Habibollah Sayyari announced that some 25 naval exercises had been planned to be held by the end of the current Iranian year (March 20, 2018).
Sayyari said that the naval exercises will be held in the Persian Gulf and Caspian Sea.
Iran regularly conducts various drills to enhance the defense capabilities of its armed forces and to test modern military tactics and equipment.
The Islamic Republic’s military program has always been a point of concern for the world powers as they often show strong reaction against the country’s missile tests, in particular.
But Tehran has repeatedly announced that its military might poses no threat to other countries, reiterating that its defense doctrine is based on deterrence.