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Iran’s oil sales rise as sanctions pressure eases

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LONDON – Iran’s oil exports have picked up modestly in January for the third consecutive month, according to sources who track tanker movements, adding to signs that the easing of sanctions pressure on Tehran is helping its oil exports to recover.

The increase in shipments is around 50,000 barrels per day (bpd), according to one tracker company, which would take Iranian exports to around 1.2 million bpd for January and add about $150 million a month to Tehran’s depleted oil revenues.

The small rise is unlikely to be a direct consequence of the easing of sanctions, which only took effect on Monday, and shippers say they are still waiting to finalize the paperwork now insurance restrictions on vessels carrying Iranian crude have been eased.

But the interim deal, which was agreed back in November in return for curbs on Iran’s nuclear program, has improved sentiment and reduced risk for buyers, giving Iranian exports a much-needed boost in the months since.

Iran's oil sales rise as sanctions pressure eases“The suspension of oil export sanctions takes the pressure off Iran’s oil sector, which was close to running out of storage capacity for its production surplus and in danger of incurring irreparable losses stemming from the forced closure of oil fields,” said Mark Dubowitz, of U.S.-based think-tank the Foundation for Defense of Democracies and a proponent of tough sanctions on Iran.

“There will be reduced transaction costs to service shipments of crude. And Iran now can cease to rely on foreign-owned vessels to transport goods, freeing up shipping capacity to deliver its oil.”

A second tracking source familiar with Iran’s shipments, who estimated an increase of 60,000 bpd in January, said he had seen a pick-up “especially in India”.

“China’s purchases remain firm, with Turkish imports at around 105,000 barrels per day. Syria is still picking up modest cargoes,” the source said.

A sustained increase in exports from Iran, as well as a recovery in Libyan exports, could weigh on oil prices in 2014. So far, though, the rise in Iranian supplies is modest and restricted to existing customers, mostly in Asia.

One major Chinese buyer said their December-January import requirements would hold steady, while a separate buyer said they were expected to have raised imports since November to top up on cuts from previous months.

A source with a Japanese buyer of Iranian oil said import volumes were likely to remain steady in the coming months.

“This is a country with falling demand and refinery capacity, so there’s not much enthusiasm for raising term volumes in general,” a separate oil market source in Japan said.

INSURANCE RELIEF

Sources in South Korea with knowledge of Iranian oil imports said volumes remained steady.

“It is hard to make any move as this is a temporary sanction-easing measure. We will continue to import the oil at our previous levels, and I don’t see any change within this year as our contract is yearly based, and insurance issues are not yet solved,” one Seoul-based source said.

Oil industry sources in India say they expect Iranian oil imports to remain steady in coming months.

“So far we have not heard anything from insurers. If they withdraw the embargo that stops us from processing Iranian crude, then we can buy it, depending on the economics,” said A.K. Basu, managing director at Chennai Petroleum Corp, a unit of leading refiner Indian Oil Corp.

For six months from Monday, the European Union and the United States have eased some sanctions including restrictions on ship insurance, which became available for the first time since mid-2012. Vessels transporting Iranian crude have previously been left with limited alternatives, mostly set up by importers.

“Normal services have been partially resumed in relation to those activities, which are now permissible for a temporary six-month period subject to further review and possible extension thereafter,” said Andrew Bardot, executive officer of the International Group of P&I clubs, an association whose members insure the majority of the world’s tanker fleet.

“As from July 21, there will no longer be this flexibility, obviously pending any further extension or renewal.”

Specialist Protection & Indemnity (P&I) insurers, mutually owned by shipping lines, dominate the market for insuring ocean-going vessels against pollution and injury claims, the biggest costs when a tanker sinks.

However, companies still under sanctions include top Iranian oil tanker group NITC. Ship insurer UK P&I Club said last week a continuing prohibition on dealings with designated persons or entities remained in place.

PRODUCTION AMBITIONS

The International Energy Agency said in its monthly report on Tuesday that Iranian exports rose in December by 50,000 bpd to 1.15 million bpd, and could increase further now shipments are easier to insure.

“The relaxation in tanker insurance provisions in the current sanctions regime may lead to small increases in Iranian crude exports to existing customers in the short term,” said the IEA, which advises industrialized countries on oil policy.

The sanctions imposed in 2012 on Iran have led to a drop in Tehran’s production – output is down 1 million bpd since the start of 2012 to around 2.75 million bpd – and lost it billions in oil revenue.

Top Iranian officials say the country can raise production to 4 million bpd within six months of sanctions being lifted. Western experts say 3-3.5 million bpd is more likely.

Still, a return to Iran’s pre-sanction export level of over 2 million bpd is some way off. Customers including Western oil companies forced by the sanctions to cut ties with Iranian oil are still steering clear.

“Talk of the sanctions being lifted is making people more optimistic,” said an industry source. “But the reality of the situation has not changed much.”

Iran is also looking at other ways to boost exports. Sources told Reuters earlier this month that Iran and Russia were negotiating an oil-for-goods swap worth $1.5 billion a month under which Moscow would buy up to 500,000 bpd of Iranian oil in exchange for Russian equipment and goods.

– REUTERS

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Oil

FG Introduces New Incentives To Revitalize Nigeria’s Oil & Gas Industry

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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.

 

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Tinubu set to approve ExxonMobil-Seplat oil deal, expands CNG bus initiative

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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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ExxonMobil To Invest $10bn In Nigeria’s Deep-Water Oil Operations

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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.”

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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.

 

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