Iran and Italy have signed a framework credit deal to fund up to EUR 5 billion (USD 6.02 billion) of investments in Iran, Italy’s economy ministry announced on Thursday.
Iran’s Bank of Industry and Mine (BIM) and Middle East Bank will partner with Italian state-owned holding Invitalia in the agreement.
The funding will cover joint Iranian-Italian projects in the areas of infrastructure, construction, oil and gas, electrical energy, chemicals, petrochemicals and metallurgical industries.
BIM is a state-owned development bank providing finance for industrial and mining projects in the country. The bank’s main objective is to channel finances towards developing Iran’s economy. The bank assesses and supervises industrial and mining projects, including power and oil and gas projects, as well as renewables initiatives and more.
BIM has financed energy projects such as South Pars phases 19, 20 and 21; oilfield developments on the Iraq border; the Kavian Petrochemical Complex; the Mahabad and Lorestan polyethylene plants; the Bid Boland 2 refinery project; the Ilam Petrochemical complex expansion; and the Bushehr Petrochemical mega-project.
The arrival of 2018 promises to bring about big changes to all the local energy sector’s major fronts – electricity, natural gas, renewable energy and hydrocarbons – and radically reshape these sub-sectors by the time the year is out.
The government is expected to have finalized a national energy plan within the year, officially presenting the direction of policies pursued.
It should be a busy year for energy-sector privatizations. An international tender offering 66 percent of DESFA, the natural gas grid operator, is already well in progress. The launches of privatizations concerning ELPE (Hellenic Petroleum), DEPA (Public Gas Corporation) and PPC (Public Power Corporation) are expected this year.
Energy infrastructure developments concerning natural gas pipelines, a prospective LNG terminal in Alexandroupoli, northeastern Greece, as well as an underground gas storage facility in the Kavala area, northern Greece, are also expected.
The bailout-required sell-off of PPC units, a procedure already underway and representing 40 percent of the power utility’s overall lignite capacity, promises to reshape Greece’s electricity market.
The establishment of an energy exchange, another bailout requirement incorporated into the Target Model, a process entailing the local electricity wholesale market’s harmonisation with EU law, promises to significantly alter how the electricity market operates.
The end of PPC’s monopolization of the country’s lignite sources, combined with the utility’s required retail electricity market share contraction, will clearly change the market. Bigger electricity amounts to be offered to independent suppliers through four NOME auctions in 2018 promise to reshuffle market shares. NOME auctions were introduced slightly over a year ago to offer independent suppliers access to PPC’s lignite sources.
The new flexibility remuneration mechanism, new demand response mechanism (interruptability) auctions, following a two-year extension, will also lead to market changes. The demand response mechanism enables major industrial enterprises to be compensated when the TSO (ADMIE/IPTO) requests that they shift their energy usage by lowering or stopping consumption during high-demand peak hours so as to balance the electricity system’s needs.
In the natural gas sector, DEPA, the gas utility, will need to limit its dominant market presence. The utility is currently engaged in negotiations with its co-shareholders in the EPA Attiki and EPA Thessaloniki-Thessaly retail ventures. The Greek government is supporting DEPA’s withdrawal from EPA Thessaloniki-Thessaly and an increased share of EPA Attiki. Shell, the holder of a 49 percent stake in EPA Attiki, has indicated it wants to withdraw. Italy’s ENI holds a 49 percent share in EPA Thessaloniki-Thessaly. DEPA is the majority shareholder in both ventures with 51 percent stakes.
A 9 percent sales increase reported by DEPA for the nine-month period of 2017, upbeat forecasts for the utility’s performance in 2018, as well as heightened trading activity anticipated from Prometheus Gas and M&M Gas promise to increase the market’s size and competition.
Combined electricity-and-gas packages are being prepared by retailers now that the gas and electricity markets have been liberalized. PPC, the main power utility, is preparing to enter the natural gas market while major independent electricity retailers have launched campaigns offering customers combined electricity-and-gas packages.
The new year also promises significant RES market changes. New renewable energy projects planned for development are expected to enter the RES market with new and more competitive terms.
The European Commission has already endorsed a Greek plan for new RES auctions. These are expected to end the stagnancy experienced by the local sector over recent years and also boost RES capacity.
As for the hydrocarbons sector, foreign investors are expressing a rekindled interest in Greece following recent discoveries of deposits in the east Mediterranean and Egypt. Petroleum giants such as ExxonMobil, Total and Repsol appear interested in taking part in hydrocarbon exploration initiatives, seen intensifying over the next few years.
The Greek government announced two international tenders last year offering offshore blocks in the Ionian Sea and south and southwest of Crete. Progress is expected in 2018.
BP has awarded a contract to Jacobs Engineering Group to provide engineering, procurement and construction management (EPCM) services for the Phase 2 of the $16bn Khazzan Project in Oman.
Located about 350km southwest of Muscat in the South of Block 61 at the Ad Dhahirah Governorate of Oman, the Khazzan is said to be one of the biggest tight gas projects in the Middle East.
According to estimates, the field contains proven reserves of about 100 trillion cubic feet of natural gas and condensates as of 2012.
Under the three-year contract, Jacobs will be responsible for providing engineering, procurement and construction management (EPCM) services in support of the project, including the ongoing expansion of the gas gathering system, wellsite facilities and export pipelines.
Jacobs Petroleum and Chemicals president Vinayak Pai said: “We are committed to continuing our relationship with BP through the next development phase of this world-scale gas project.
“Upon completion of the project, this field has the potential to produce gas for Oman for decades to come and simultaneously sets the stage for knowledge transfer and Omanization.”
Jacobs earlier delivered EPCM services for the process and infrastructure work during the first phase of the greenfield project which commenced production in 2017.
The first phase of the project is expected to develop approximately seven trillion standard cubic feet of gas.
In total, the project will have plateau production capacity of one billion standard cubic feet of gas per day and 25,000 barrels of gas condensate per day.
BP Oman with a stake of 60% is lead partner in the Khazzan project while the remaining 40% stake is held by Oman Oil Company Exploration & Production.
Iran is ready to build the onshore stretch of a major gas pipeline project that would transfer natural gas from the Persian Gulf to Oman south of the Sea of Oman, the CEO of the National Iranian Gas Company Hamidreza Araqi said on January 13, 2018.
In February 2017, Tehran and Muscat signed a preliminary agreement on the pipeline project that is estimated to cost $1.2 billion. But the venture is still at an embryonic stage.
Based on an earlier agreement in 2013, Oman would take in 28 mcm/d of gas from Iran for 15 years. The 2 nations hope the gas flow will begin by 2020.
The sultanate could import as much as 20 billion cubic meters a year of Iranian gas, or more than 50 mcm/d, to meet its demand.
The pipeline will circumvent the maritime boundary of the UAE «because the emiratis will not allow the pipeline to be laid in their territorial waters», according to Oil Minister Bijan Zanganeh.
The decision means the pipeline will be laid on parts of the Sea of Oman, which could go deeper than planned. The pipeline may be laid close to 1,000 meters below the sea's surface instead of the shallower UAE waters at around 300 meters.
Potential Partners
International oil and gas firms, including Total, Shell, KOGAS, Mitsui & Co., Uniper SE and E.ON, could be involved in the gas venture, according to an official at the NIOC.
Russia, Iran's political ally and an increasingly close economic partner, could also help with the development plan.
NIOC chief Ali Kardor said last month that Iran is interested in Gazprom’s participation in the Iran-Oman gas pipeline.
«There has been huge interest [between NIOC and Gazprom] in the prospects of the joint construction of Iran-Pakistan-India and Iran-Oman gas pipelines,» Kardor told Sputnik.
In November, Gazprom and NIOC signed a MoU, which opened the way to a study into the prospects of cooperation in the development of gas fields in Iran, gas transportation and monetization.
Morocco will launch a tender for companies to establish a $4.6 billion natural gas project, Moroccan Energy Minister, Aziz Rabbah, stated, according to Bloomberg.
The project is set to generate 2,700 MW of electricity from liquified natural gas (LNG), and is expected to boost the kingdom’s energy mix alongside renewable energy, Morocco World News reported.
The $4.6 billion will be allocated for infrastructure and will be used in the construction of an LNG terminal, located at Jorf Lasfar, near the western port city of El Jadida. The terminal will be complete within five years.
“This is a project to build an integrated plant to process gas,” Rabbah said in an interview in Abu Dhabi, adding that with the chosen technical and financial consultants, the tender will be assigned for a group to establish the plant.
Morocco is aiming to decrease its dependency on imported fossil fuels. It is adopting plans to produce 42% of its energy from renewable sources by 2020, Rabbah pointed out, adding, “we might surpass that target because there are massive investments now.”