The Week in Review – April 11-18

Monitoring Team – Pierre Jouvellier, Bogdan Polishchuk

Iranian natural gas, what about a floating liquefaction plant?

Since the US sanctions against investments in energy projects have been lifted, Iran is seeking to send its natural gas to Europe. The Iranian Oil Company is currently holding negotiations with a Norwegian company in order to build a floating liquefied natural gas facility. Such a project necessities huge investment but has several environmental and economic advantages in addition to cover all the aspects of conventional liquefaction plants. Indeed, FLNG facility avoids the expensive construction of large pipelines and other onshore infrastructures. Moreover, it increases both the energy security and flexibility by avoiding pipeline-related disruption from the rebels and terrorists, and by decreasing dependence on fixed infrastructures. The aim of the project is to be able to supply Europe and Far East with LNG by 2018. For the moment, Iran has signed an agreement with Oman to pipe a 28 MMcm per day and about 30% of these daily deliveries will be turn into LNG to supply Europe through the Qalhat LNG terminal. If this project becomes a reality, the world largest gas reserve could therefore compete with other players on the international gas market, not forgetting that the country has also several other ongoing projects.

Tasnim News Agency Team, 2016. Iran, Norway Planning Joint FLNG Project, Tasnim News Agency, 7 April.

Rakesh Upadhyay, 2016. Will Iran Manage To Construct A floating LNG Facility, Oil Price, 11 April.

 The Iran-Pakistan pipeline is facing new issues.

The recent partial lifting of international sanctions against Tehran was supposed to give new hope for the construction of the Iran-Pakistan pipeline. Although the Islamic Republic of Iran has large and sufficient gas reserves, it does not have enough production and it needs to drill more wells in the South Pars gas field. Moreover, the infrastructures in the Pakistanis section are not ready for several reasons. Besides, If Iran plans to meet the pipeline’s capacity of 21.24 MMcm/d, it would have to ramp up development at South Pars. Pakistanis demand for natural gas is about 227 MMcm/d and even if Pakistan can produce half of its demand, the country needs this pipeline to be built in order to cover the remaining half of its demand. Importantly, Iran, which regularly encounters shortages in natural gas supplies, has to cover its own domestic gas demand. This means that in case of shortage, the country would not be able to provide natural gas to Pakistan. Through this project, Iran plans to supply other potential gas clients such as Bangladesh by extending the project to South Asian nation, and India by building a sub-sea pipeline.

BBC Team, 2016. Iran seeks to revive Pakistan gas pipeline, BBC, 14 April.

Garima Chitkara, 2016. Iran-Pakistan pipeline faces headwinds, Interfax Energy, 12 April. 

Saudi Arabia: More Pain on Oil Producers

Negotiations to freeze crude production at January levels fell apart over the weekend. Iran did not show up and Saudi Arabia refused to negotiate without Iran’s presence. Downward pressure on crude futures will be intense as the Saudi’s compete for market share. But it’s not just the Iranians in the crosshairs, the United States will suffer as well. “The number of rigs in U.S. oil fields has fallen by nearly 80 percent from a peak of about 1,600 in October 2014 to roughly 350 last week.”

DiChristopher, Tom. “Saudis Not Done Inflicting Pain on Drillers: Kilduff.” CNBC. 18 Apr. 2016.

OPEC: Another Former Member Wants to Rejoin

The African nation of Gabon wants to rejoin OPEC after more than two decades. This would be the second former member in a year to seek a return to the oil exporters’ group just as it is taking the first steps in years to prop up prices.

Lawler, Alex. “Another Former OPEC Member, Gabon, Wants to Rejoin Oil Group.” NEWS |   | Rigzone. N.p., 15 Apr. 2016.

The TAPI pipeline has found new financial supports and is gaining ground.

The Turkmenistan-Afghanistan-Pakistan-India gas pipeline has recently seen progress after years of delay. This multi-billion dollar project has recently attracted the Islamic Development Bank. Moreover, the four TAPI countries agreed to invest USD 200 million in the next stage of the project. Firstly, the Turkmen side has completed the first kilometer of the 214km pipeline in the region and the 27.4 Tcm Galkynysh gas field will supply it. Moreover, drilling new well to a depth of 4,800 meters has started in this field and seven more have been planned which will allow Turkmenistan to increase the volume from this gas field to 95 BCM / year by 2020. The rest of the 1,814 km pipeline will pass through Afghanistan (774km), Pakistan (826km), and will reach a capacity of 90 MMcm per day for 30 years. The TAPI pipeline is planned to be operational in 2019.

Natural Gas Asia Team, 2016. Islamic Development Bank Keen to Participate in TAPI Project, Natural Gas Asia, 16 April.

NaturalGasAsia Team, 2016. Caspian Overview: Ashgabad outlines TAPI plans, Natural Gas Asia, 15 April. 

Egypt: Zohr field developed by Eni to start by End-2017

Italy’s Eni is focused on starting production at its giant offshore Zohr gas field in Egypt by end of 2017, the company’s Chief Executive Officer Claudio Descalzi reported. Eni has a long history of offering competitive terms to North African countries to develop their oil reserves. This represents a world-wide trend of movement to expansion of gas supply. Setting up a field in Egypt will ensure energy security for Italy in the near future. In the mean time, Egypt is turning from exporter to importer of LNG, so additional upstream activities might be useful for the country to regain its position in international gas markets.

Reuters. “Eni Focused on Starting up Its Egypt Gas Field Zohr by End-2017.” NEWS |   | Rigzone. N.p., 15 Apr. 2016. 

The interests for LNG bunkering are ramping up with new LNG powered vessels.

Since the idea of possible LNG bunkering for non-LNG vessels has emerged, maritime companies are trying to take advantage on this new fuel. Maerks Maritime Technology has recently joined the Society for Gas as Marine Fuel in order to enhance its participation for the development of LNG bunkers. Recently, Woodside Energy Ltd, an Australian O&G company, has signed a five-year charter contract with the Norwegian company Siem offshore in order to have its first LNG-powered marine support vessel in 2017. Indeed, Australia will become one of the most important players in international gas market with several giant projects such as Gladstone and Ichthys. Therefore, as one of the new world’s top exporter of natural gas and by choosing dual-fuel propelled vessels, Australia will save money on bunkering by running its fleet on boil-off gas instead of marine diesel-oil bunkers. Moreover, the use of natural gas boil-off will contribute to the environment, generating less sulfur and CO2 emissions and will promote energy efficiency with the expansion of LNG-fuelling in Western Australia.

LNG journal Team, 2016. Woodside brings in first LNG-fueled vessel to Asia-Pacific from Norway on charter, LNG journal, 12 April.

Mark Smedley, 2016. Woodside Charters First Dual-Fuel LNG Vessel, Natural Gas Asia, 12 April.

Ship&Bunker News Team, 2016. Agreement Inked for First LNG-Bunker Powered MSV in Australia, Ship&Bunker, 12 April.

Ship&Bunker News Team, 2016. Maersk Ups Interest in LNG Bunkers, Ship&Bunker, 15 April.

 Indonesia is looking toward natural gas by building a new gas pipeline for 2019.

Indonesia is looking into options for electrification of its archipelago by using natural gas as a source. The country, which is a large natural gas producer, has already built floating storage and regasification unit (FSRU) managed by The Perusahaan Gas Negara (PNG). Although this LNG facility is going to be optimized to pipe until 1.1 MMcm per day for West Java and South Sumatra, it is not sufficient to meet the archipelago’s demand, which is mostly provided by coal-fired plant due to low prices of coal. Therefore, PNG aims to build a 1,680 km pipeline in order to increase the supply solution in Indonesia. It is not the only gas project initiated in Indonesia. Indeed, last February; the French Total SA, which is the first IOC implanted in Indonesia since 1968, has signed long-term LNG sale and purchase agreements with Pertamina for the supply of 1mt / year over a period of 15 years and beginning in 2020.

Natural Gas Asia Team, 2016. PGN Aims to Build, 1,680 km of Gas Pipeline in Indonesia by 2019, 11 April.

Admin, 2016. Perusahaan Gas Negara to build 1,680 km of gas pipeline by 2019, The insider stories, 12 April.

Rosneft’s new plans in East Siberia

Vankorneft, a Rosneft subsidiary, is planning to build a new gas processing plant and pipeline at its Tagulskoye oil and gas field, part of the Vankor cluster of fields in eastern Siberia .Russia continues its strategy of developing its gas sector. Eastern Siberia has less reserves than Western Siberia, but it is part of a comprehensive strategy to increase Russia’s gas supplies. Gas processing plant is an important part of marketing resources from East Siberia: they are generally characterized by lower percentage of methane and thus needs processing.

Brelsford, Robert. “Rosneft Plans New Gas Processing Plant at Tagulskoye.” Oil and Gas Journal. N.p., 14 Apr. 2016.

Rosneft Stake Worth About nearly 10 billion USD to be Privatized

Russian Finance Minister Anton Siluanov said in an interview with CNBC the government’s current estimate of the value of the 19.5 percent stake in oil producer Rosneft that it plans to privatize is around 650 billion roubles ($9.9 billion). Russia is in desperate need of capital, and is offering privatization schemes to incentivize investment in many state companies with significant assets. Whether this short-term capitalization plan will succeed or not is still a question, as are the potential consequences.

Reuters. “Russian Finmin: Rosneft Stake to Be Privatized Worth About $9.9B.” NEWS |   | Rigzone. N.p., 15 Apr. 2016.

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