Global Business in Iran Update, March 3 - April 1, 2010
China offers investment for and India expresses interest in the Pakistan-Iran pipeline, upon which Pakistan and Iran have signed an agreement for construction commencement; Vitol, Royal Dutch Shell, Trafigura, Ingersoll-Rand, Reliance, and Lukoil halt Iran business; Iran plans bond sale to finance South Pars; Russia says it will start Bushehr in June; and $13 billion deal signed between Swiss EGL and National Iranian Gas Export Company.
New Projects in Iran:
(March 6, 2010) CPTDC, a unit of China’s National Petroleum, has signed a $143 million contract with the state run North Drilling Company (NDC) to deliver a drilling rig that will be used in the NDC’s Persian Gulf oil fields. NDC plans to order two more drilling rigs from CPTDC in the near future. See Global Business in Iran for details.
(March 29, 2010) China has come out as willing to invest $2.5 billion to extend the Iran-Pakistan pipeline to their territory. See Global Business in Iran for details.
(March 31, 2010) In 2007, India declined to participate in the Iran-Pakistan pipeline deal citing concerns about energy security. As of late March, with the signing of the contract between Iran and Pakistan, India has once again expressed interest in joining the IPI pipeline, restarting talks with Tehran. See Global Business in Iran for details.
(April 1, 2010) Reliance Industries, India’s largest privately run oil company, has decided not to renew a contract to import crude oil from Iran in fiscal year 2010. While the nearly 100,000 barrels of oil that Reliance imported a day represents only 2.4 percent of total Iranian exports, it highlights a drift in Asia away from Iranian crude and towards Russian oil. Reportedly, this drift is not exclusively caused by American sanctions as Russia is exporting cheaper and sweeter crude, lessening the need for inferior Iranian crude beyond an already volatile political climate. See Global Business in Iran for details.
(March 16, 2010) Iran and Pakistan signed a tariff and tax agreement in Turkey paving the way for the construction of the Iran-Pakistan Pipeline. Construction will begin immediately and the work should be completed by 2014. Under the terms of the deal, Iran will provide Pakistan 750 million cubic feet of gas per a day from its South Pars gas field for twenty-five years. The gas will be piped through Balochistan before reaching Pakistan's gas grid at Nawabshah.
The agreement does not state how the two countries will finance the project, especially given U.S. sanctions against business activity in Iran’s energy sector. Russian energy giant,Gazprom, has reportedly met with Pakistani and Iranian officials. The project will cost an estimated $7.5 billion and involve the National Iranian Gas Company (NIGC) and Pakistan’sSui Northern Gas Pipeline and Sui Southern Gas Company Limited (SNGPL, SSGCL). SeeGlobal Business in Iran for details.
(March 3, 2010) Iran and Russia recently signed an agreement to create a joint investment company to upgrade and invest in the Qazvin-Rasht-Astara railway, which runs between Iran and Azerbaijan. Russia plans to export railway equipment to Iran to assist in the modernization project. Representatives of the two nations also discussed the creation of a sea-rail link between the Russian port of Makhachkala and the Iranian port of Amirabad. See Global Business in Iran for details.
(March 24, 2010) Within the next two weeks Ankara hopes to reach a final decision on whether to proceed with a $5.5 billion investment into Iran’s natural gas sector. Turkish energy minister Taner Yildiz said the project enjoys considerable political support in Ankara and should proceed if feasibility studies of Iran’s South Pars gas field prove to be fruitful. At the present time there is no information on the companies involved or with whom Turkey would be working with inside Iran. See Global Business in Iran for details.
UNITED ARAB EMIRATES
(March 31, 2010) National Paints, the largest Middle Eastern paint company, plans to open 2 plants in Iran, one in Tehran and one near the Iran-Iraq border. With these plants, National Paints hopes to capture nearly 30 percent of the Iranian paint market and use their Iran-Iraq plant as springboard into the Iraqi market, until recently serviced by National Paints' plant in Jordan. See Global Business in Iran for details.
Updates to Existing Business Projects
(March 9, 2010) Iran planned to offer a 1 billion euro bond sale to finance the South Pars gas field project. The bond sale aims to raise 1 billion by December, rising to $12 billion USD by 2012. This bond was released behind schedule, in early March of 2010 rather than late 2009 as was originally planned. See Global Business in Iran for details.
(March 8, 2010) Trafigura, one of the largest oil traders in the world, will no longer sell Iran gasoline. No details on how much gasoline Trafigura has previously sold to Iran have been released. See Global Business in Iran for details.
(March 24, 2010) Lukoil halted work at the Anaran project in Iran, which is estimated to hold nearly 2 billion barrels of oil at four sites. Company executives, citing U.S. sanctions against Iran as the reason for the withdrawal, noted that if the political climate changes Lukoil will re-enter the market. However, the company does not see itself reinvesting at the site for the foreseeable future due to the volatile political climate. See Global Business in Iran for details.
(March 19, 2010) Russia announced that it would start up the Bushehr plant in the late summer, most likely June, prompting outcry from the United States. As of June 2009, the Russian Nuclear Corporation planned to complete construction of the Bueshehr Nuclear Reactor. Moscow and Tehran have discussed the possibility of setting up a ten-year nuclear fuel delivery plan, but both sides have focused on finishing the reactor. On 16 November 2009, Russia said that due to "technical considerations", the power plant would not be completed by the end of 2009. See Global Business in Iran for details.
(March 8, 2010) The Iranian Offshore Oil Company is in late-stage talks with an unknown Polish company, likely PGNiG, to develop the Lavan Gas Field in Southern Iran. The deal is worth an estimated $4 billion. Iran expected the deal as early as October 2009. On 20 October 2009, Shana announced that the European firm had received state permits and that an Iranian firm would be in Europe to sign the deal shortly. On 8 March 2010 the technical and investment aspects of the deal were finalized with the next round of talks to be held in Tehran before 20 March. If signed to develop LNG facilities at Lavan, 4 million tonnes of LNG are expected to be exported to Europe annually. See Global Business in Iran for details.
(March 16, 2010) In March 2008, the National Iranian Gas Export Company and Swiss firm EGL signed a $13 billion, 25-year contract for the export of 5.5 BcM LNG to Switzerland annually, seeking to reduce that country's dependence on Russian gas. This deal was finalized recently, with Switzerland's Foreign Minister reportedly in Tehran to sign the agreement. EGL says that the deal may be worth as much as 22 billion Euros ($30.3 billion). See Global Business in Iran for details.
(March 8, 2010) Vitol, a large energy commodity trading company, has decided to cease supplying the Islamic Republic of Iran with gasoline. This follows similar recent announcements by industry leaders Glencore and Reliance Industries. Vitol is currently supplying Iran with gasoline under contracts enacted before the start of the year, but the company says it will neither renew these contracts nor negotiate for additional ones. See Global Business in Iran for details.
(March 16, 2010) Turkey and Iran plan to build a tax-free industrial township on their common border, most likely in the Turkish town of Iğdır. Turkey and Iran plan to double their $10 billion in trade over the next five years. They also plan a free-trade agreement and an upgrade of the Lake Van Northern Passage Project. As of March 2010, Turkey and Iran have decided to most likely build the township in Maku, Iran. See Global Business in Iran for details.
(March 10, 2010) Royal Dutch Shell has stopped selling gasoline to Iran. Royal Dutch Shell is the most recent large oil company that has stopped sales to Iran due to the impending threat of United States sanctions. According to Reuters, Shell, one of the largest oil companies in the world, shipped about 1.65 million barrels of gasoline into Iran from April through October 2009. See Global Business in Iran for details.