Oil
Iran oil, energy investment sanctions still in force – U.S.
DUBAI – The nuclear deal signed on Sunday will not allow any more Iranian oil into the market, or let western energy investors into the country, but it does freeze U.S. plans for deeper cuts to Iranian crude exports, Washington says.
Iran and six world powers reached a breakthrough deal early on Sunday to curb Tehran’s nuclear program in exchange for limited sanctions relief.
But U.S. and EU sanctions on Iran’s energy sector, which have prevented western energy companies from dealing with Tehran, and slashed its oil exports from 2.5 million barrels per day (bpd) to around 1 million bpd, will remain in place.
“In the next six months, Iran’s crude oil sales cannot increase,” a fact sheet posted by the White House on the U.S. State Department’s website on Sunday said.
“Under this first step, the EU crude oil ban will remain in effect and Iran will be held to approximately 1 million bpd in sales, resulting in continuing lost sales worth an additional $4 billion per month, every month, going forward.”
Western pressure on Iran’s mainly Asian oil customers to find other suppliers has supported global oil prices over the last two years. Rising U.S. and Saudi production has helped dampen the impact of around 1.5 million barrels per day of Iranian oil being shut out.
U.S. lawmakers had planned further cuts in Iran’s oil exports but Washington has pledged not to impose new nuclear-related sanctions over the next six months, so long as Iran sticks to its side of the deal.
Less crude from Iran would increase pressure on regional rival Saudi Arabia to squeeze more out of oilfields that have already been pumping at record levels this year.
Benchmark Brent crude hit a six-week high of $111.40 on Friday on early uncertainty over whether an agreement over Iran’s nuclear program would be reached.
Brent eased late on Friday on renewed hopes that the long-awaited deal would be struck, closing the week on $111.05 a barrel. Oil markets are closed on Sunday.
LITTLE RELIEF
The White House estimates that Iran has lost more than $80 billion since the beginning of 2012 because of lost oil sales. It also estimates Tehran’s earnings over the next six months will be $30 billion down compared with a six-month period of 2011, before sanctions were imposed.
U.S. sanctions effectively bar Iran from repatriating earnings from oil exports, forcing customers to pay into a bank in their country.
Washington estimates that Iran has around $100 billion in foreign exchange earnings trapped in such accounts.
Under the terms of the deal, Iran will be allowed access to $4.2 billion of oil export revenues. But nearly $15 billion will still flow into accounts overseas over the next six months, according to the U.S. government.
“We expect the balance of Iran’s money in restricted accounts overseas will actually increase, not decrease, under the terms of this deal,” the White House fact sheet said.
The U.S. government has also suspended some restrictions on gold and precious metals trade and lifted sanctions on Iran’s petrochemical exports that were imposed earlier this year.
OTHER ENERGY SANCTIONS
Iran is home to some of the world’s largest oil and gas reserves but U.S. energy firms have been barred by Washington from Iran for nearly two decades.
Several European oil and gas companies had planned multi-billion dollar investments over the last decade to help develop Iranian reserves.
However U.S. pressure drove European energy companies away from Iran in the late 2000s, for fear of jeopardizing their interests in the U.S. market if they stayed.
Western companies, whose technology Tehran needs to fully exploit its oil and gas riches, are keen to go back into Iran when sanctions are lifted.
Despite the landmark deal struck on Sunday, U.S. restrictions on trade, including those banning long-term investment or provision of technical services to Iran’s energy sector, are still in place.
Sanctions preventing the sale of petroleum products to Iran, which needs to import such fuels because it lacks refining capacity, also remain in effect.
Potential buyers of Iranian crude have found it difficult to insure their multi-million dollar shipments, because of wide-ranging restrictions on providing financial services for Iranian trade.
The White House fact sheet says that financial sector sanctions remain intact, along with those affecting Iranian shipping companies.
However, a senior western official said on Sunday that relief on EU sanctions on oil shipping insurance was included in the deal.
The EU could relax insurance restrictions without causing a rebound in Iranian oil exports by only allowing customers to insure their current volume of oil purchases and no more. It is unclear how the EU would police this.
– REUTERS
The Nigerian National Petroleum Company Limited (NNPC) has unveiled a bold strategy to reduce methane emissions in the oil and gas sector by 60% by 2031, with an ultimate goal of achieving net-zero emissions by 2060.
This announcement reinforces Nigeria’s leadership role under the Global Methane Pledge initiative and its commitment to tackling climate change.
The Group Chief Executive Officer of NNPC, Mele Kyari, disclosed these plans during a meeting on Thursday with Robert Leahman, the U.S. State Department’s Global Methane Program Manager, and a delegation from Deloitte.
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The discussions, held at the NNPC Towers in Abuja, focused on collaborative efforts to reduce methane emissions through innovative and sustainable practices.
“Reducing methane emissions is not just an environmental necessity but also a strategic imperative for Nigeria’s energy transition. We are leveraging partnerships to adopt global best practices and innovative solutions,” Kyari stated.
Key among these efforts is a pilot project in the Niger Delta, aimed at establishing emissions baselines, mitigating methane leaks, and promoting sustainable operations across Nigeria’s energy sector.
The project, a partnership between NNPC, Deloitte, and the U.S. Bureau of Energy Resources, will utilize data-driven methodologies to pinpoint and address methane hotspots.
Robert Leahman commended Nigeria’s proactive stance, describing it as a benchmark for other nations on the continent.
“Nigeria’s leadership under the Global Methane Pledge sets a standard for the continent. These initiatives will not only help reduce emissions but also drive sustainable development in the energy sector,” he said.
Kyari highlighted the broader benefits of addressing methane emissions, noting its significance for both environmental protection and economic efficiency.
“This collaboration is a game-changer. By addressing methane leaks, we’re reducing waste, saving costs, and protecting the environment. It’s a win-win for our economy and the planet,” he added.
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
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