Iran signs $1.35 billion oil and gas deals despite US sanctions

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Iran has signed $1.35 billion deals to process natural gas extracted from its oilfields and develop another oilfield in its resource-rich province of Khuzestan, Petroleum Ministry Javad Owji said.

About $500 million of the deals involve the construction of facilities to capture gas from eastern Karoun fields, Owji said on Monday, adding that the Persian Gulf Holding Company will also soon sign similar contracts to collect gas from the fields. from West Karoun.

The National Iranian Oil Company (NIOC) has also awarded an $800 million contract to local upstream contractor Dana Energy to develop the 2 billion barrel Sohrab oilfield.

Iran’s bid to stop flaring mined gas alongside crude oil in its fields has met with obstacles as foreign companies have suspended deals with the country for fear of sanctions.

Owji said more contracts to end gas flaring will be signed in the coming days.

“By the end of this government, the fate of gas flaring projects in oilfields will be determined,” he said.

Oil-producing countries often flare or burn a certain amount of natural gas that accompanies crude oil to the surface, which is too small to be recovered or transported to a processing facility. The phenomenon does, however, emit hazardous air pollutants when the associated gas is flared.

Former Oil Minister Bijan Zangeneh once said that Iran needed $5 billion in investment to stop burning gas in its oil fields.

Under a 20-year contract, Dana Energy on Sunday pledged to produce 160 million barrels from the Sohrab field and boost production to 30,000 barrels per day.

Sohrab is one of many fields straddling the Iran-Iraq border. It shares a reservoir with the 1 billion barrel Huwaiza field in Iraq, which state-owned Misan Oil (MOC) began developing in 2017.

15 countries present at Iran expo

Owji’s announcement on Monday came as the 15th Iran International Plastics, Rubber, Machinery and Equipment Expo (IRAN PLAST) kicked off at the permanent international exhibition center in Tehran.

More than 430 domestic and foreign companies from countries as diverse as China, Taiwan and Italy are participating in the four-day expo. More than 300 traders and business representatives from 15 countries visit the international event.

Addressing the opening, Owji spoke of the crucial role of the petrochemical sector in providing much-needed hard currency at a time when the most draconian sanctions are being imposed on the country.

Over the past 10 months, he said, $10 billion in petrochemical revenues have been handed over to Iran’s Integrated Forex Management System, known locally as NIMA, which the government uses to procure goods. essentials at preferential exchange rates.

“The petrochemical industry is less vulnerable to sanctions and has played an important role in meeting the country’s foreign exchange needs,” the minister said.

Petrochemicals provide a crucial boon for Iran to resist draconian US sanctions that are primarily aimed at drying up the Islamic Republic’s oil exports.

Iranian officials say the wide variety of petrochemicals and huge international demand for them due to their quality and price make the industry unsanctionable.

The United States imposed sanctions on Iran’s petrochemical industry, including the Persian Gulf Petrochemical Industries Company (PGPIC), which is the country’s largest petrochemical holding company and its network of 39 petrochemical subsidiaries in June 2019.

It banned purchases of Iranian aromatic, olefinic and synthetic gases, as well as their derivatives, including ethylene, propylene, butadiene, benzene, toluene, xylene, ammonia, methanol and urea.

The Treasury Department said in a statement at the time that the sanctions were aimed at stifling funding for Iran’s largest and most profitable petrochemical group.

Officials said Iran’s petrochemical revenues will hit a record $20 billion in the current Persian year of 1400 which ends March 20, 2022.

“About $14 billion of this amount will come from foreign exchange earnings and $7 billion from domestic sales, which is a significant record and this amount of revenue will be achieved for the first time in the petrochemical industry,” said the former managing director of the National Petrochemical Company. (NPC) said Behzad Mohammadi in July.

Energy markets are closely watching Iran’s talks in Vienna to lift illegal US sanctions against the Islamic Republic amid searing oil prices.

If the sanctions are lifted, Iran could quickly export millions of barrels of crude and help drive down prices.

“If global consumers, especially large economies, are dissatisfied with current price levels and volume of supply, and find them against their interests, my best suggestion for them is the reversal of unilateral U.S. sanctions on as soon as possible and the opening of the hall for the return of Iranian production with maximum capacity in global markets,” Owji said last week.

“Without a doubt, the global market needs the additional supply from Iran. We are ready to increase our supply of oil to world markets as soon as possible.

Crude prices have risen around 20% this year, with analysts warning they are likely to rise above $100 a barrel due to strong global demand.

Earlier this month, JP Morgan warned that Brent could hit $125 a barrel as OPEC spare capacity falls to 4% of total capacity by the fourth quarter of 2022.

Prices stabilized lower on Monday on perceived signs of progress on lifting US sanctions on Iranian oil sales as negotiators returned to Vienna to resume talks.

Brent crude stood 58 cents, or 0.6%, at $92.69, Reuters reported. Its session high of $94 was the highest since October 2014.

U.S. West Texas Intermediate crude fell 99 cents, or 1.3%, to settle at $91.32 after touching $92.73.

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