LONDON: Total will go ahead with development of a giant Iranian gas field this summer, its CEO told Reuters, in the first major western energy investment in the country since Tehran signed an international nuclear deal.
Chief Executive Patrick Pouyanne said the French group would make an initial $1 billion investment after the US extended sanctions relief for Iran under the 2015 agreement.
Washington has warned that it could cancel the sanctions waivers if it believes Tehran is not curbing its nuclear program in line with the deal with world powers.
“It is worth taking the risk at $1 billion because it opens a huge market. We are perfectly conscious of some risks. We have taken into account (sanctions) snap-backs, we have to take into account regulation changes,” Pouyanne said in an interview.
The offshore field was first developed in the 1990s and Total was one of the biggest investors in Iran until the international sanctions were imposed in 2006 over suspicions that Tehran was trying to develop nuclear arms.
Total has decided to return and develop phase 11 of the South Pars project in the Gulf, which will cost up to $5 billion, at a time when President Hassan Rouhani has faced criticism at home over a lack of economic revival following the easing of sanctions under the nuclear deal.
Though one of the world’s largest oil and gas producers, most major international giants including Royal Dutch Shell and BP have so far shown limited appetite to invest in Iran, due to uncertainty over contract terms and a sharp drop in global oil prices.
US President Donald Trump’s hard line on Iran has further cooled the investment climate, even though his administration extended the wide sanctions relief last month.
“The US waivers have been renewed and they will be renewed every six to eight months. We have to live with some uncertainty,” said Pouyanne.
Total holds a 50.1 interest in the South Pars project along with state-owned China National Petroleum Corporation (CNPC), with 30 percent, and Iran’s Petropars with a 19.9 percent, he said.
The French group has also made a number of significant investments in recent years in Abu Dhabi, Qatar and Brazil as Pouyanne sees the three-year downturn in the global energy market as an opportunity to clinch deals for cheap resources to secure strong growth.
Total aims to achieve returns of above 15 percent on every new project it is enters into around the world. That includes South Pars, where terms discussed with the Iranian government would be significantly better than in the pre-sanctions period, Pouyanne said.
Investors have complained that previous Iranian contracts allowed foreign companies little profit. Total worked on phases 2-3 of South Pars in the 1990s. The new Iranian Petroleum Contract (IPC) differs from its predecessor by offering the operator remuneration based on production rather than a simple percentage of the development costs, Pouyanne said. It also extends over a period of 20 years rather than seven or eight.
France’s Total to go ahead with major Iran gas project: CEO
France’s Total to go ahead with major Iran gas project: CEO
Mitsui to join with ADNOC and others in LNG project in UAE, Nikkei reports
TOKYO: Japan’s Mitsui & Co plans to participate in a $7 billion liquefied natural gas project in the UAE, teaming up with Abu Dhabi National Oil Co. and others, the Nikkei reported on Tuesday.
ADNOC will participate with a stake of around 60 percent and Mitsui with 10 percent of the project, the Nikkei said, adding Mitsui’s investment is estimated to be several tens of billions of yen.
Other oil majors Shell, BP and Total Energies are also expected to invest, the report said.
The companies aim to produce about 10 million metric tons of LNG per year, the report said.
Pakistan eyes new IMF loan by early July, finance minister says
ISLAMABAD: Pakistan could secure a staff-level agreement on a new long-term larger loan with the International Monetary Fund by early July, its finance minister said on Tuesday, according to Reuters.
The country’s current $3 billion arrangement with the fund — which it secured last summer to avert a sovereign default — runs out in late April.
The $350 billion South Asian economy faces a chronic balance of payment crisis. The government is seeking a larger, long-term loan to help stabilize economic activity and financial markets so it can execute long-due, painful structural reforms.
If secured, it would be the 24th IMF bailout for Pakistan.
“We are still hoping that we get a staff-level agreement by June or early July,” Finance Minister Muhammad Aurangzeb told a conference in Islamabad.
He returned from Washington last week after leading a team to attend the IMF and World Bank’s spring meetings.
“We had very good discussions in Washington,” he said.
He said he did not know at this stage the volume and tenure of the longer program, although he has previously said that he was looking for at least a three-year bailout plan.
Both sides have said they were already in discussions for the new loan. A formal request, however, will be made once the current facility expires, with the IMF board likely to meet late this month to approve the second and last tranche of the current support scheme.
The economy is expected to grow by 2.6 percent in the fiscal year 2024, the finance minister said, adding that the inflation was projected at 24 percent, down from 29.2 percent in fiscal 2023. It touched a record high of 38 percent last May.
Aurangzeb said structural reforms would include increasing the government’s tax revenue-to-GDP ratio to 13 percent to 14 percent in next two or three years from the current level of around 9 percent, reducing losses of state-owned enterprises through their privatization, and better management of the debt-laden energy sector.
Oil Updates – prices stabilize, Middle East tensions remain in focus
NEW DELHI: Oil prices edged higher on Tuesday, after falling in the previous session, as investors continued to assess the risk from geopolitical concerns in the Middle East, according to Reuters.
Global benchmark Brent crude oil futures traded 18 cents higher at $87.18 a barrel by 9:34 a.m. Saudi time, and US West Texas Intermediate crude futures also gained 16 cents to $82.06 a barrel.
Both benchmarks fell 29 cents in the previous session on signs that a recent escalation of tensions between Israel and Iran had little near-term impact on oil supplies from the region.
“The unwinding of geo-political risk premium has dented crude oil prices recently as supply was not disrupted meaningfully,” said Sugandha Sachdeva, founder of Delhi-based research firm SS WealthStreet.
But the evolving geopolitical landscape remains critical in steering crude oil prices, she said.
“While there are no indications of an imminent full-scale war between the countries involved, any escalation in tensions could quickly reverse the current trend,” Sachdeva added.
ANZ analysts echoed the sentiment and highlighted US approval of new sanctions on Iran’s oil sector that broaden current sanctions to include foreign ports, vessels and refineries that knowingly process or ship Iranian crude.
Also, EU foreign ministers agreed in principle on Monday to expand sanctions on Iran after Tehran’s missile and drone attack on Israel, the bloc’s foreign policy chief Josep Borrell said.
“The geopolitical backdrop is still very fraught with so many risks at the moment, so clearly we’re going to see a lot of volatility until there’s a lot more clarity around it,” the ANZ analysts said in a podcast.
Israeli troops fought their way back into an eastern section of Khan Younis in a surprise raid, residents said on Monday, sending people who had returned to abandoned homes in the ruins of the southern Gaza Strip’s main city fleeing once more.
Investors are waiting for the release of the US gross domestic product figures and the March personal consumption expenditure data — the Fed’s preferred inflation gauge — later this week to assess the trajectory of monetary policy.
US crude oil inventories are expected to have increased last week while refined product stockpiles likely fell, according to a preliminary Reuters poll of analysts.
“Sticky US inflation figures, hawkish statements from key Fed officials, and rising US inventories are all acting as constraints on crude oil price growth,” Sachdeva said.
Pakistan hopes to get new IMF loan by early July, says finance minister
- Pakistan’s current $3 billion financial arrangement with IMF expires in late April
- Islamabad is seeking “bigger,” long-term loan to ensure macroeconomic stability
Pakistan is hoping to reach a staff-level agreement with the International Monetary Fund by June or early July, its finance minister said on Tuesday.
The country’s current $3 billion arrangement with the fund runs out in late-April, which it secured last summer to avert a sovereign default.
Islamabad is seeking a long-term bigger loan to help bring permanence to macroeconomic stability as well as an umbrella under which the country can execute structural reforms.
“We are still hoping that we get a staff-level agreement by June or early July,” Finance Minister Muhammad Aurangzeb told a conference in Islamabad.
He returned from Washington last week after leading a team to attend the IMF and World Bank’s spring meetings. “We had very good discussions in Washington,” he said.
He said he did not know at this stage the volume and tenure of the longer program.
Riyadh prepares to host special meeting of World Economic Forum
- The aim of the gathering is to find solutions to global challenges relating to humanitarian issues, the climate and the economy
RIYADH: Final preparations are taking place this week in the Saudi capital, Riyadh, for a special meeting of the World Economic Forum in the city on April 28 and 29.
Heads of state and senior executives from the public and private sectors are expected to be among the participants, who will discuss a range of global economic issues and developments under the theme “Global Collaboration, Growth and Energy for Development.”
The aim of the meeting is to find solutions to a host of global challenges relating to humanitarian issues, the climate and the economy. On the sidelines of the main event, the Kingdom will host exhibitions and other events to highlight the latest developments and trends in areas such as sustainability, innovation and culture.
The selection of Riyadh as host of the special meeting reflects the extensive partnership between Saudi Arabia and the WEF, officials said.
It builds upon the Kingdom’s active participation and contributions to the WEF’s Annual Meetings in Davos.
The agenda is designed to rekindle the spirit of cooperation and collaboration with various panel discussions, workshops, and networking opportunities. It represents a significant gathering of global leaders and experts dedicated to forging a path toward a more resilient, sustainable, and equitable world.
