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Iran Economy Update
Issue 69/2017 SUNDAY JULY 2ND
NIOC and Total to sign contract on developing South Pars phase 11 on Monday
The contract for developing South Pars phase 11 will be signed on Monday afternoon between France Total and NIOC, Tasnim news agency reported today.
Petroleum Minister Bijan Zangeneh, NIOC Managing Director Ali Kardor, the CEO of Total, the managing directors of the Pars Oil
& Gas Company (POGC) and Petropars, and CEO of China’s CNPC will attend the signing ceremony. Mohammad Meshkin- Fam, the POGC managing director has said phase 11 is the last part of giant South Pars gas field on the Iranian side1 that had not yet been handed over to any company for development. He said the once become operational, 56 million cubic meters per day of natural gas will be extracted from the field. On 9 November, a Heads-of- Agreement worth $4.8 billion was signed between NIOC as the project owner and a consortium comprising France Total (50.1%), China’s CNPC (30%) and Iranian Petropars (19.9%) as the project’s contractors.
Iran and Korea edge closer in launching direct flights
The head of the Iran-Korea Parliamentary Friendship Group said Tehran and Seoul have agreed on launching direct flights, and Iranian officials from the ministry of Road &
Urban Development, the Civil Aviation Organization, and the Iran Air are scheduled to meet with their Korean counterparts in this regard soon, Mehr news agency reported on Sunday morning.
Speaking about the outcome of the session of the Iran-Korea Parliamentary Friendship
1 The field is shared between Iran and Qatar and the Qatari side of the field is called North Dome
Group, Asadollah Abbasi said during the meeting, the two sides reached “good”
agreements on launching direct flight. The Iran-Korea Parliamentary Friendship Group session was held last week in Seoul on the sidelines of the annual Meeting of Speakers of Eurasian Countries' Parliament.
Asadollah Abbasi said Koreans are interested in Iran in terms of tourism as well as historic values, and cited the absence of direct flight as one of the reasons foreign tourists have in their travel to Iran. He said that in the session participated by the parliament speakers of Iran and Korea, Hassan Ghashghavi, the Iranian Ministry of Foreign Affairs’ deputy for consular and parliamentary affairs said the ministry is ready to issue tourist visa in 11 airports of Iranian tourist cities. “Since currently there is a direct flight from Seoul to Dubai, Koreans can enter the Iranian cities like Isfahan, Shiraz and so on from Dubai where they can immediately receive their tourist visa,” added the official. He said that along with the [state-owned] Iran Air, Iranian private airliners can also participate in arranging the Iran-Korea direct flight launch.
“Currently, Iran has direct flight with a limited number of south eastern Asian countries and with regards to the large number of Muslim population living in this region, we can establish direct flights with the countries that have greater cultural affinity with Iranians,” Abbasi added.
Abbasi said during the meeting between the Iranian and Korean parliamentary groups, Parliament Speaker Ali Larijani raised the issue of Iranian blocked oil sale assets in Korean banks, and the Korean side agreed to pay the Iranian money back in euro.
2 German Linde is back in Iran on transport and petrochemical projects After a four year hiatus, German Linde Group has resumed activities in Iran by opening a representative office in Tehran, ILNA reported on Saturday. Christophe Lautray, a member of the Management Board of Linde said the company is back to make direct investment in transport industry, and answering a question on if the company will leave Iran again he said the Group understands the importance of Iranian market and is going to keep presence in this country. “I give you the assurance that in good and worse conditions, the company will stay in Iran and continue operations.”
“Under the sanctions era, we were able to be present in the Iranian market only through China but today, conditions have changed, and now is the time to make direct investment in this country. The presence of French Peugeot and the joint investment contracts it has signed indicate the reason for this claim.” According to ILNA, the Iranian Axon Machine Aryana has received exclusive permission from the Linde Group as a reprehensive company in Iran.
In a separate development, an Iranian petrochemical official has said that negotiations go on with the Linde Group for the provision of technology and license for a plan to increase ethylene production in the Jam Petrochemical Plant. According to the Persian Language Energy News website, Hossein Mir-Afzali, the managing director of the Jam Petrochemical Plant said the talks take place after a contract was signed between the Linde Group and the Kian Petrochemical Plant, and while similar talks have also been held with the Maroun and Bandar-e-Imam Petrochemical plants.
The Energy News website wrote that in the past 1.5 years, negotiations have been held and initial agreements have been reached in some cases with German companies such as BASF, Linde, Siemens, Lurgy, and so on for investment, purchasing technology know-how, and providing engineering services in Iranian petrochemical plans.
Iran denies report on decline in crude oil exports in July
An NIOC official has denied reports about a decline in Iran’s oil exports volumes and said the drop in oil shipment to India has been completely compensated by the surge in exports to other Asian and European countries, a local Iranian energy website reported on Friday. NIOC Managing Director Ali Kardor made the remarks in response to the Reuter’s Thursday report that Iran’s crude exports (excluding condensates) in July will fall to 1.86 million bpd2. Reuters claims that the drop is due to a decline in exports to Europe. The data provided by Reuters are summarized in the following two tables.
Export destination June July
Asia 1.300 1.280
Europe 0.700 0.580
Total exports 2.00 1.86
Figures are in million barrels per day Source: Reuters
Asian country June July China (bpd) 638,000 658,000 India (bpd) 464,000 395,000 Japan (bpd) 100,000 134,000 Korea (bpd) 90,000 97,000 Total Asian imports 1,300,000 1,280,000
Amount of oil imports in July by Iran’s Asian customers – Source: Reuters
Reuters also wrote that in Europe, main buyer Turkey is lifting 194,000 bpd in July, down 27% from June. Italy is loading nearly 100,000 bpd, down from 133,000 bpd in June. Greece and Spain are each lifting nearly 65,000 bpd next month, little changed from June.
NIOC Managing Director Ali Kardor however on Friday claimed that demand for Iranian crude oil is currently that high that the country cannot meet all of them.
2 Reuters wrote loading figures for condensates (an ultra-light crude extracted from gas fields) are not available for July
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“Presently, the volume of Iran’s crude exports to Europe has reached one million bpd, which is a record high,” said Kardor.
He also boasted that in the post-sanctions era, Iran has pursued the policy of diversifying its oil customers and today, it has stared exporting oil to the countries that were not among its customers formerly.
Iran’s Export Development Bank and Paris-Based Tejarat Bank ink refinance deal
The Iranian Export Development Bank has signed a 25-million-euro short-term refinance contract with the Paris branch of Bank Tejarat, ILNA reported on Sunday.
According to the public relations office of the Export Development Bank of Iran, this LC has been established to provide the customers with the facilities from the line of credit extended by foreign banks, especially the European ones. According to this agreement, the Paris branch of Bank Tejarat will finance 100 percent of the value of lines of credit opened by the Export Development Bank of Iran with an annual interest rate of 2%.
Foreign Minister Zarif ended his European tour with visiting Paris
The Saturday edition of the economic daily Donyay-e Eghtesad has taken a closer look at the visit of Foreign Minister Javad Zarif to France and his meeting with the senior officials of this European country including President Emmanuel Macron and Minister of Foreign Affairs & International Development Jean-Yves Le Drian. The daily argues that although the two countries may have different views on the Syrian issue, there are three areas in which they can share interest and ideas, namely (1) the mutual economic benefits of implementing the JCPOA (2) countering terrorism and the role Iran can play in fighting against the Islamic State, and (3) altering the tensioning policies of President Trump in the region.
From an economic vantage point, Donyay-e Eghtesad newspaper believes that using economic and business opportunities of engagement with Iran can bring about huge
benefits to France as this 2nd biggest economic power in Europe is struggling with job creation challenges.
Meanwhile, Spokesman of Iranian Foreign Ministry Bahram Ghassemi has provided a summary of the “achievements” of the visit of Minister of Foreign Affairs Javad Zarif to the three European countries last week.
According to ILNA, Ghassemi said Europe has many capacities for cooperation for Iran and has always been one of the “main pillars” of Iranian foreign policy. He said Zarif’s meetings in Germany on political, regional and economic issues were
“constructive and fruitful.” Ghassemi cited Italy as one of Iranian important political, economic, and cultural partners. He said Zarif’s meeting with the French president was held in a “warm and friendly”
atmosphere and said the concurrent election of Rouhani and Macron as presidents of Iran and France can herald new relations between the two countries.
