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NIOC, Gazprom Sign Gas, LNG Roadmap
The heads of National Iranian Oil Company (NIOC) and Russia's Gazprom have signed two memorandums of understanding focusing on a roadmap for gas cooperation and relaunching the Iran LNG project.
The event, which was seen over by Iran's Minister of Petroleum Bijan Zangeneh, came one month after the NIOC signed six MOUs with Russian companies on the sidelines of a visit to Tehran of Russian President Vladimir Putin.
Zangeneh said Iran-Russia cooperation in gas market was decisive.
He referred to his useful talks with CEO of Gazprom, saying: "Over the past one year, the NIOC has signed numerous MOUs with Gazprom, but this MOU is for Gazprom to present its plan for the development of Kish, North Pars as well as Farzad A and Farzad B gas fields."
He said that these development plans would target gas exports. He added: "Costs must be recouped from gas exports. For this reason, Gazprom, which is an experienced company, will envisage gas exports either via pipeline or via establishment of liquefied natural gas (LNG) plants."
With the startup of new phases of South Pars gas field under the administration of President Hassan Rouhani, Iran's gas production capacity has increased to 850 mcm/d, but markets for Iran gas are not yet sufficient. Turkey and Iraq are buying gas from Iran, while Iran has gas swap deal with Armenia and Nakhichevan.
Iran has widespread plans to develop its independent and also jointly owned gas fields and expand its export markets.
In addition to the NIOC-Gazprom MOU, NIOC and Oil Industry Pension Fund Investment Company (OPIC) – which are owners of Iran LNG – signed an MOU with Gazprom.
Zangeneh said the Iran LNG company is incomplete plant with a production capacity of 10 million tonnes a year.
The minister said Gazprom would conduct its financial and technical study on the project during a 6-month period before presenting its proposal for contribution to the financing of this plant.
Zangeneh said the NIOC-Gazprom MOU was an important step for the Russian firm's presence in Iran's gas development projects, as well as gas-powered petrochemical plants.
Asked about how much investment was needed for the project, the minister said: "Roughly $4 billion in investment is needed to complete the Iran LNG project, but we will know in coming months about the next phase of partnership."
In response to if Gazprom would be a partner with Iran in gas exports, Zangeneh said: "Every circumstance depends on future negotiations."
"Cooperation between Iran and Russia, which respectively hold the first and the second largest known gas reserves in the world, will be decisive in the world market," he said.
Gas Fields Study Results in 2018
Alexey Miller, CEO of Gazprom, said the NIOC-Gazprom MOU was an important step for gas cooperation with Iran.
"This company will present its development reports about Farzad A and B, North Pars and Kish gas fields during the first quarter of next year to the NIOC," he said.
He added that Gazprom would also study details of presence in the Iran LNG project.
10 Oil Deals
Separately, Zangeneh said negotiations were under way for signing 10 oil contracts.
"As far as their conclusion is concerned I have to say that we are only one party to agreement and the other party constitutes companies we are negotiating with," he said.
Zangeneh said the negotiations were going ahead seriously, "but both internal and external factors affect such issues that would be out of control of both parties."
Asked about putting out to tender the Azadegan oil field, Zangeneh said: "The process of tender for this field is going ahead on schedule and there has been no delay. As I have already said in case everything goes ahead normally the result of this tender bid will be come out in summer 2018."
Reformatting Contract with Norway's Helma
Zangeneh said the framework of Iran's contract to sell LNG to Norway's Helma is likely to change.
"It may become like that our gas would belong to us and the Norwegian party would be remunerated for converting gas into LNG and delivering," he said.
Zangeneh said the NIOC might have to consider such an option for certain reasons, adding: "I think the Norwegian company will accept to be remunerated. Meantime, we have to take care of marketing for LNG supply."
Iran signed first ever contract to export natural gas in the form of LNG, following months of negotiations.
The contract was signed between the NIOC and IFLNG (jointly owned by Iran’s Khark Gas Refining Company and Norway's Helma).
Under the contract, Iran’s natural gas will be converted to LNG in a floating LNG vessel (FLNG), belonging to Belgium's Exmar.
The vessel called, Caribbean FLNG which is chartered by IFLNG Company, has the capacity to produce 500,000 tonnes of LNG per year.
The 20-year contract will come into force within three months.
The Caribbean FLNG is expected to dock at Pars Service port in Persian Gulf in mid-2018, in order to receive 2.3 mcm of natural gas per day from 7th South Pars Gas Refinery.
Openness to Talks with Turkmenistan
Asked about Turkmenistan's decision to take its gas dispute with Iran to international arbitration, Zangeneh said: "Turkmenistan has not field any request for referring the issue to arbitration and they always prefer that the issue would not go to arbitration. However, if negotiations fail to yield results the issue will go to arbitration. But we have let the path to talks open."
Turkmenistan signed a deal with Iran in 1997 to supply gas to some northern provinces in Iran. It halted its gas supply to Iran last January citing a price row. Turkmenistan had earlier done so in 2007 when a cold spell had hit Iran.
As South Pars is developed further Iran will have no problem with its domestic gas supply. However, a 1,500-km pipeline is needed to be built to carry gas from South Pars to northern Iran, while a 100-km pipeline can deliver gas from Turkmenistan to northern Iran.
Oil Revenues to Materialize
Zangeneh said Iran would reach the target of producing 5 mb/d of crude oil and gas condensate. "We will reach the target set in this regard," he added.
Touching on oil revenues for the current calendar year to March 2018, he said: "According to what we said from the very beginning, more than 2.5 million barrels of oil was exported at $50 price and we will gain more than envisaged for" current calendar year."