Japanese companies leading in oil deals with Iran

Japanese companies leading in oil deals with Iran

Baku, Azerbaijan, Jan. 13

By Dalga Khatinoglu – Trend:

Iran has recently published the list of 29 foreign companies qualified to participate in development projects of 49 oil and gas fields based on a newly designed agreement, called the Iran Petroleum Contract (IPC).

Five companies in the list are Japanese, including Inpex, Japan Petroleum Exploration, Itochu, Mitsui and Mitsubishi Corporation.

Japan is one of Iran’s major oil clients, which imported more than 225,000 b/d of Iranian oil in 11 months of 2016, according to Reuters’ calculation.

Iran’s Mehr News Agency also reported Jan. 13 that Japan imported 214,000 b/d of Iranian oil in 2016, about two times more than the sanctions level (2012-2015). The sanctions on Iran were removed in January 2016.

According to the report, during 2016, Iran signed one-year and long-term agreements with Japanese JX Nippon Oil & Energy Co., Idemitsu Group, Showa Shell (a part of the Royal Dutch Shell Group), TonenGeneral Sekiyu and Cosmo Oil Company to export oil.

Iran also signed a memorandum of understanding with Inpex to study its South Azadegan oil field with 25.34 billion barrels of in-situ oil but very low recovery rate of 6.6 percent.

Iran will in coming weeks issue the first tender, based on IPC, for development project of South Azadegan.

On the other hand, Iran has MoUs with MITSUI, Mitsubishi and Japan Petroleum Exploration on upstream oil sector.

According to Mehr’s report, Iran also signed deals with JX Nippon Oil & Energy Co., Japan Cooperation Center Petroleum and Cosmo Oil to enhance Tabriz, Tehran, Bandar Abbas and other refineries, and is in talks with JGC Corporation and Chiyoda Corporation on the same field as well.

Iran also signed deals with Marubeni and Itochu to provide Iranian petrochemical projects with usance (providing finance from international markets on short-term).

Iran’s Persian Gulf Petrochemical Industries Company (PGPIC) signed a usance deal with Itochu on December 4, 2016.

The Japanese firm will provide 320 million euros of finance to the Iranian company under the deal.

The PGPIC previously signed a similar financing deal worth 320 million euros under NEXI insurance coverage with Marubeni Company in Tokyo on September 1, 2016.

Iran plans to increase its oil and gas condensate production from the current 4.2 mb/d to about 5 mb/d by 2021 by attracting $100 billion in upstream oil and gas sector. It also plans to increase the gross gas output (including re-injection and flaring) from the current 280 bcm/d to 456 bcm/d in the next five years.

On the other hand, the country hopes to bring the petrochemical production capacity from the current 62 million tons per year to 120 million tons per year by 2021 and 160 million tons per year by 2025 by attracting $50 billion investment.

Iran also plans to renew and construct refineries to boost its oil refining capacity from the current 1.8 mb/d to above 3 mb/d. For renewing the existing refineries, Iran needs $14 billion investment. The main goal is to increase the products’ standards as well as decrease the fuel oil output ratio from the current 24 percent to 10 percent.

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Dalga Khatinoglu is the head of Trend Agency’s Iran news service, follow him on Twitter: @dalgakhatinoglu

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