August 5, 2017

KNOWING YOUR ALLIES:

Are Iran and Qatar reshuffling energy geopolitics in the Gulf? (RĂ©mi Piet, 7/11/17, TRT World)

On Tuesday, Qatar announced a 30 percent hike in its output of liquefied natural gas over the next five to seven years. This decision by the country that is already the world's largest producer of LNG will further increase the developing supply glut, pull prices down, and seriously harm the balance sheets of energy companies, particularly those in North America.

The announcement was not the only blow to Donald Trump's hope for American energy dominance as it came just one day after French oil company Total S.A. signed a historic agreement with Iran - by far the most important investment contract since the nuclear deal and the lifting of sanctions. This contract foresees the development of phase 11 of "South Pars" , the largest gas field in the world, straddling Iran and Qatar.

With this decision, Total became the first Western oil company to reinvest in Iran two years after the lifting of sanctions against the country in 2015. The contract allows the French major to own 50.1% of a consortium gathering the Chinese national company CNPC (30%) and the Iranian company Petropars.

Evaluated at 4.8 billion dollars, this investment provides Iran with a much needed financial boost and demonstrates the positive output of the nuclear negotiations and liberalisation of its economy. It also offers a breath of fresh air to President Hassan Rouhani, re-elected on the promise that the opening of the country he advocates for, would lead to a steady improvement of the country's economy thanks to an expected $50 billion in foreign investment. Yet, several years after his arrival to power, investments have remained scarce, in particular due to the fear of retaliation from the United States.

Among the opponents to the deal were also the hard liners of the Iranian regime who intensified their criticism of the president in recent weeks and operated in the background to solidify the control of the Revolutionary Guards over part of the economic apparatus.

During the last decade of sanctions, the Pasdarans, or the Iranian Revolutionary Guards, had taken advantage of the isolation of the country to strengthen their positions in key sectors, especially those of construction, oil and gas. Not surprisingly, Iranian oil companies linked to the Revolutionary Guards continuously insisted on managing its oil and gas industry autonomously without the participation of a foreign company.

But as Iranian oil minister Bijan Namdar Zanganeh confirmed, the country does not have the money nor the technological knowledge to develop a natural gas field that can place Iran back at centre stage of energy geopolitics. 

Posted by at August 5, 2017 12:12 PM

  

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