Russia Eyes Rapid Middle East Energy Expansion

Graph 1. Russian Participation within the framework of the Iran Petroleum Contract.

 

Having battled through the travails of an ever-tightening sanctions regime and a prolonged economic downturn, which in most cases led to a freezing up or lowering of expenditures and the adoption of a very risk-averse investment strategy, Russian companies are now destined to embark upon a new expansion, this time in the Middle East. With the recently imposed U.S. sanctions further impacting Russia’s ability to form partnerships with Western majors, Iran, Iraq and possibly even Syria will become the new hub of Russian oil-related investments. Immensely rich in oil, yet lacking the funds necessary to exploit it, virtually unsanctionable for any potential cooperation with Russian companies (even sanctions vis-à-vis Iraq are implausible given the ongoing fight against the Islamic State) and brought ever closer together politically on the back of recent developments in the region, the Middle East-Russia axis is bound to get stronger with time.

Is A Russian-Iranian Energy Pact In The Making?

 

In the lead-up to President Rouhani’s visit to Moscow, expected to take place in late March, a plethora of news regarding joint Russo-Iranian energy projects has been circulating on the Internet. A three-year long negotiation process regarding a 100,000 barrels-per-day swap contract is believed to be agreed upon, premised on Iran providing Russia (most likely, Rosneft) oil from Kharg Island or other hubs in the Persian Gulf in return for cash and Russian goods that Iran would “require”. Teheran also woos LUKOIL, currently Russia’s only major oil producer in the Caspian, to participate in swap deals bound for Iran’s Neka Port (in return for Iranian crude provided from Kharg Island or other Persian Gulf hubs), albeit on a much smaller scale at 4000 to 5000 barrels per day. To top it all up, numerous Russian oil companies have committed themselves to developing Iran’s hydrocarbon fields.

Exclusive: Iran wants euro payment for new and outstanding oil sales – source

A general view shows a unit of South Pars Gas field in Asalouyeh Seaport, north of Persian Gulf, Iran November 19, 2015. Reuters/Raheb Homavandi/TIMA

 

 

Iran wants to recover tens of billions of dollars it is owed by India and other buyers of its oil in euros and is billing new crude sales in euros, too, looking to reduce its dependence on the U.S. dollar following last month’s sanctions relief.

A source at state-owned National Iranian Oil Co (NIOC) told Reuters that Iran will charge in euros for its recently signed oil contracts with firms including French oil and gas major Total, Spanish refiner Cepsa and Litasco, the trading arm of Russia’s Lukoil.

CEO of French oil giant Total dies in jet crash at Moscow’s Vnukovo Airport

The CEO of France’s oil and gas giant Total, Christophe de Margerie, was among four people killed in a business jet crash at Vnukovo Airport in Moscow after the aircraft hit a snowplow on take-off.

Total’s chairman and CEO was the only passenger in the Falcon 50 business jet besides three crewmembers who were also French citizens.

“Total confirms with deep regret and great sadness that Chairman and CEO Christophe de Margerie died just after 10pm (Paris time) on October 20 in a private plane crash at Vnukovo Airport in Moscow, following a collision with a snow removal machine,” the company said in a statement.

Russian companies withdraw billions from west, say Moscow bankers

Russian companies are pulling billions out of western banks, fearful that any US sanctions over the Crimean crisis could lead to an asset freeze, according to bankers in Moscow.

Sberbank and VTB, Russia’s giant partly state-owned banks, as well as industrial companies, such as energy group Lukoil, are among those repatriating cash from western lenders with operations in the US. VTB has also cancelled a planned US investor summit next month, according to bankers.

Gazprom brush-off: Germany’s largest gas supplier signs ‘milestone’ contract with Canada

Germany’s largest gas supplier E.ON plans to taper its dependence on Gazprom, Russia’s state-owned gas major and Norway, instead developing ties with the Canadian company Pieridae Energy.

The contract was finalized on June 3rd, and Pieridae Energy will supply five million tonnes of liquefied natural gas (LNG) to Western Europe for an unspecified several billion euros, Deutsche Welle reported.