Oil
Iran to reassert authority at OPEC after nuclear deal
VIENNA – Bijan Zanganeh returns this week to the same Vienna hotel suite he last occupied eight years ago as Iranian oil minister, ready to prepare OPEC for what Tehran hopes will mark its return as the cartel’s second biggest producer.
Emboldened by its nuclear deal with the West, Iranian oil negotiators led again by industry veteran Zanganeh, will seek to reassert Tehran’s authority in the Organization of the Petroleum Exporting Countries at a Wednesday meeting.
Western sanctions imposed in 2012 on Iran for its nuclear program have cost it dearly, losing it billions of dollars in oil revenues and market share in OPEC – largely to its main regional political rival Saudi Arabia, and neighbor Iraq.
With its exports still shackled by sanctions for at least another six months, Iran poses no immediate threat to the status quo. Oil ministers are widely expected to roll forward until June an agreement to hold their output near 30 million barrels daily for 12 member countries.
But oil traders will be watching closely for signs of cooperation, or otherwise, between the big three producers in OPEC, knowing that Riyadh and Baghdad will need to find room for Iran should its interim nuclear deal be verified and sanctions lifted.
Reappointed to the oil ministry by Iran’s new and more western-friendly President Hassan Rouhani, Zanganeh has openly criticized Iraq, now OPEC’s second biggest producer, for increasing its market share at Tehran’s expense.
“Iraq has replaced Iran’s oil with its own,” Zanganeh said in November. “This Iraq move is not friendly at all.”
“We expect the Iranians to say, ‘We’re coming back to the market and we need some space,'” said an OPEC delegate from a rival Gulf Arab producer.
Rising volumes from the United States spurred by production from new shale technology may mean OPEC will need to cut output in the second half of 2014 if it wants to keep oil prices above $100 a barrel.
“From now until the end of March, the market looks well balanced and the price should stay supported. But from June, there will be a need for a cut,” said a senior OPEC delegate.
“The onus would be on Saudi Arabia and a few other Gulf producers to rein in the incremental output they put into the market,” said Samuel Ciszuk, oil analyst at the Swedish Energy Agency.
Because of sanctions, Iran’s output is down a million bpd since the start of 2012 to 2.7 million bpd while Iraq, recovering from years of war and sanctions under Saddam Hussein, has boosted production to nearly 3 million bpd.
“Iran’s position has been strengthened after the Geneva deal, but there is still a long way to go,” said energy consultant Mehdi Varzi, formerly of state National Iranian Oil Company.
“The bottom line is the Iranians don’t want to rock the boat and put $100 oil under threat, so they need the cooperation of the Saudis.”
Oil prices now near $110 a barrel are close to ideal for Saudi Arabia, OPEC’s most influential producer because of its one-third share of group output, and its position as the only producer globally that keeps any significant spare capacity.
Riyadh pumped at record levels above 10 million bpd when sanctions were imposed on Iran and to fill the gap left by post civil war disruption in Libya, throttling back a little recently to support prices.
NAIMI, ZANGANEH MET 1997
The relationship between the oil ministers of Saudi Arabia and Iran is key to policy-making in the often-quarrelsome OPEC.
Long-standing Saudi Oil Minister Ali al-Naimi first met his Iranian counterpart at Zanganeh’s OPEC debut in Jakarta in 1997 – a meeting where Riyadh pushed through a surprising production increase that helped send oil prices crashing.
Saudi Arabia’s moderate position on oil prices, to support world economic growth, has often clashed with price hawk Iran’s wish to keep OPEC production in check to support prices.
But Zanganeh, who served as oil minister under Iran’s reformist government from 1997-2005, and his trusted aide, Hossein Kazempour Ardebili, are respected within OPEC and will want to be at the centre of negotiations.
Iran’s oil minister under former President Ahmadinejad was Rostam Qasemi a former commander of the Revolutionary Guard’s engineering wing, Khatam al-Anbia and did not play a significant role at OPEC.
While the oil price hawk-versus-dove dynamic persists between Sunni Muslim Saudi Arabia and Shi’ite Muslim Iran, their price aspirations have converged around triple digit oil.
“Saudi Arabia and Iran don’t trust each other,” said Varzi, “But the Saudis will not gratuitously raise tensions within OPEC.”
The combination of a renaissance for both Iran and Iraq, also Shi’ite-led, are causing jitters for Riyadh, concerned that its long-standing bond with the United States is in jeopardy.
“Saudi Arabia is worried that the United States is drawing closer to Iran, after the Geneva talks and it fears it could be losing its strategically important position in U.S. eyes should the detente continue,” said Ciszuk.
Zanganeh has already been in contact with the big Western oil companies who would invest in Iran once sanctions are lifted. But a rapid recovery in output is unlikely.
Peter Wells of geological consultancy Neftex, who has worked in Iran, said it could probably raise output to 3 million to 3.5 million bpd within six months of the lifting of sanctions but would struggle beyond 4 million bpd.
“In the long term, Iran won’t be able to keep up with Iraq no matter how many companies pile in and invest,” Wells said. “The country’s fields have been in production for a long, long time.”
OPEC may fail again to agree to appoint a new secretary general to replace the long-standing Libyan Abdullah al-Badri.
Iran and Saudi both have candidates and neither will give way.
“Certainly we will not let those countries that are oppressive against Iran to take the role of the secretary general,” Zanganeh said in September.
– REUTERS
Oil
FG Introduces New Incentives To Revitalize Nigeria’s Oil & Gas Industry
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.
Read Also: Atiku Calls For Rotational Presidency Across Nigeria’s Geopolitical Zones
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.
Business
Tinubu set to approve ExxonMobil-Seplat oil deal, expands CNG bus initiative
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.
Oil
ExxonMobil To Invest $10bn In Nigeria’s Deep-Water Oil Operations
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
Read Also: Offset Accuses Cardi B Of Cheating During Pregnancy
This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.