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How EU gas price cap impacts markets
The European Union (EU) has over the past two decades sought to deregulate gas, thereby supporting gas pricing based on market mechanism in gas hubs versus oil-indexed gas pricing in long-term contracts. However, in the midst of Russia-Ukraine tension and the subsequent spike in gas prices, the European bloc has for the first time set a price cap for gas transactions in a bid to blunt gas price fluctuations. But what are the consequences of this policy? What message are the Europeans sending to the gas market? The Gas Market Division of the Directorate of OPEC and Int’l Energy Fora of Iran’s Ministry of Petroleum has studied this policy and its impact on global markets.
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War in Ukraine and changing geopolitics of energy
As the war in Ukraine surpassed the one-year threshold with no solid evidence that it may end soon, the international oil and energy markets demonstrate its resilience to stand to the task. International oil market and energy market was once hit by COVID late 2019 and suffered hugely throughout 2020 and part of 2021. However, thanks to coordination between OPEC and non-OPEC producers, the market found its way towards normalcy and stability.
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Iran, Saudi normalize ties at critical juncture
The Islamic Republic of Iran and Saudi Arabia, the two great oil reserves holders and producers of the Middle East and OPEC, have agreed to restore relationship that was severed during some seven years ago. The deal on restoration of ties was brokered by China and finalized in Beijing on 10 March 2023. The decision to restore ties may not have an immediate impact on the geopolitics and energy tectonic of the region and the world but, in my opinion, will rewrite the Middle Eastern pathway towards a much better dynamics. We’ve been discussing the “Asian Century” and a gradual relocation of eco-political center of gravity from West to South for quite some time. A couple of major international events; however, expedited the cycle of events.
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Iran rivals foreigners in exploration
Exploration in Iran’s petroleum industry has advanced to the extent that a large number of countries currently are asking Iran to share its geological experience with them. Mehdi Fakour, director of exploration at National Iranian Oil Company (NIOC), has said Iran has achieved geochemical and geobotanic technology in oil exploration, thereby becoming a rival to foreign companies in exploration technologies. Iran is currently in oil and gas exploration relationship with four neighbors. Talks are also under way for exporting local know-how and equipment to these countries. Fakour said it would create value and income for Iran.
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Ilam refinery gas processing up 10mcm/d
Ilam gas treatment facility is the only facility in western Iran. Sprawling on 250 ha of land, it supplies gas to western provinces in addition to feeding downstream industries including the Ilam Petrochemical Plant. The CEO of Ilam Gas Refining Company Ruhollah Nourian has said the refiner fed 1.174 bcm of gas into national grid during the first three quarters of the current Iranian calendar year (ends on March 20), up 9% year-on-year.
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Iran exports petchems under own brand
CEO of National Petrochemical Company (NPC) Morteza Shahmirzaei has announced plans for exporting “Iranian-branded” petrochemical products in the current calendar year.
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West Karoun, Iran new oil civilization
West Karoun area in western Iran is expected to form a new oil civilization. Based on plans, Iran intends to rely on the 11 oil fields located in this area with a view to lifting its crude oil output from West Karoun fields to 1 mb/d within four years.
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Abadan refinery throughput up 210 kb/d
In coincidence with the anniversary of nationalization of Iran’s petroleum industry, President Ebrahim Raeisi and Minister of Petroleum Javad Owji oversaw the inauguration of the first section of a project aimed at enhancing output from the Abadan oil refinery. Noting that the second phase development of the Abadan refinery was aimed at ending crude oil sales.
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Gas compression at South Pars
South Pars giant offshore gas field is largely expected to experience pressure fall-off within five years. Should no action be taken the field, which Iran shares with Qatar, would see its output drop 25 mcm/y. As a preventive measure, Iran’s Petroleum Ministry has adopted various methods like regular planning to drill new wells, acidizing existing wells and designing gas compression platforms with a view to maintaining pressure in the South Pars reservoir. In parallel, National Iranian Oil Company (NIOC) is planning studies on onshore and offshore platforms as a preventive measure.
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Gas renaissance after oil reservoirs depletion
By development of Khami reservoir and using associated gas extracted from fields run by National Iranian South Oil Company (NISOC), the company will commence its second step toward development in the oil-rich regions so that by taking this measure we will witness taking primary measures in line with reaching gas renaissance in an area ofover70, 000 square kilometers stretching from Bushehr province to Khuzestan province.
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Gas gathering picks up pace
Iran plans to gather 8.2 mcm/d of flare gas as of next calendar year (starting on 21 March 2023), which would increase 18.2 mcm/d during next year. Therefore, Iran would have gathered 50% of its flare gas by March 2024. In the calendar year to March 2025, Iran would be gathering 17 mcm/d of flare gas and during the following year, gas gathering would be at 7 mcm/d. Therefore, Iran would have gathered all its flare gas by 2025. Over 150 bcm of flare gas is turned into air pollutants at oil wells every year across the world. According to the World Bank (WB), that is equal to one-third of Europe’s total gas consumption. According to WB data, until 2018, Iran was the third largest producer of flare gas, behind Russia and Iraq. Flaring in Iran was down from 17 bcm in 2018 to 13.78 bcm in 2019.
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SeaPad vessel supports 18 South Pars platforms
The SeaPad logistics platform is located 105km off Assaluyeh, which is tasked with providing logistic and operational support to 18 South Pars platforms that totally produce 350 mcm/d gas. Nearly 100 persons work on SeaPad to make sure gas flow from the giant offshore gas reservoir would not halt.
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NISOC eyes output capacity hike
National Iranian South Oil Company (NISOC) is planning to enhance production within the framework of short-term annual plans. Given NISOC’s 80% share in Iran’s oil production, planning by the company’s Technical Directorate is of paramount significance. The following is the text of the interview of Ramin Rowghanian, NISOC’s technical director, with “Iran Petroleum” on oil output hike plans.
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Europe will add 50 bcm of LNG import capacity by end-2023
Ongoing tensions between Russia and the West has prompted the European Union to find alternatives to its gas imports from Russia for developing its LNG imports capacity.
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IEA: Iran’s Feb. oil output hit 2.65 mbd, up despite sanctions
SHANA (Tehran) – The latest International Energy Agency (IEA) figures show crude oil production in sanctions-hit Iran reached 2.65 million barrels per day (mbd) in February.
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Turkey gas hub ambitions
In 2008, Turkey’s Ministry of Foreign Affairs unveiled the country's national energy strategy, and for the first time in that document, it talked about Turkey is becoming the center and hub of energy transit from Central Asia, the Caucasus, the Middle East, the Balkans, and Russia to Europe. Turkey's foreign policy has since tried more and more towards the realization of this goal and made a lot of efforts in the form of long-term economic and political plans to transform Ceyhan Port into an energy terminal in the region. In this regard, Turkey has always been one of the parties present in discussions related to energy transmission lines to Europe.
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Asia main driver of 2023 oil consumer market
Global oil demand in 2023 is expected to grow 2.32 mb/d compared with 2022. China and India continue to remain the main drivers in the oil market this year. According to the Organization of the Petroleum Exporting Countries (OPEC) data, China will have a 26% share (590 tb/d) of this global increase in oil demand, but the IEA estimates China’s share at 47% (900 tb/d) of its own estimate of 1.9 mb/d increase. In-between, Russia has become a leading oil supplier to China. The Directorate of OPEC and International Energy Fora of Iran’s Ministry of Petroleum has reviewed the oil market based on the latest reports released by the OPEC, International Energy Agency (IEA) as well as the US’s Energy Information Administration (EIA).
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Sanctions fail to paralyze Iran oil industry
SHANA (Tehran) – Sanctions imposed by the enemy have failed and will fail to paralyze Iran’s largest supplier of energy and foreign currencies – the Ministry of Petroleum.
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World January LNG imports down 1.4%
The Russia-Ukraine tension is weighing heavy on the global energy market. December 2022 gas production was down 5% in the European Union and up 6% in China. In January this year, global LNG imports were down 1.4% year-on-year to 36 million tonnes. But global LNG exports were up 2.8% to 35 million tonnes. Gas Exporting Countries Forum (GECF) member states saw their share of global LNG exports in January fall 1.2% year-on-year.