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MEOG Commentary MEOG
Pumps deal progresses
Iran plan to enable oil
exports outside Hormuz
Iran has announced plans to develop a pipeline, port and downstream infrastructure that will allow for exports to be made by sea outside the Strait of Hormuz.
Iran
What:
Iran has been building out its downstream sector and already has strong fuel production capabilities.
Why:
Refining and petrochemicals are seen as key to the country’s economic success with the purchase of refined products less susceptible to sanction than that of crude oil.
What next:
Building these facilities would in theory allow Iran to disrupt maritime traffic within the Gulf, while being free to export uninhibited. However, with relatively meagre loading facilities,
the development
appears more aimed at convenience and regional development than a strategic lifeline.
A deal for oil pipeline pumps has been signed as Iran pushes ahead with a project to construct a $1.8bn pipeline to its port of Jask.
The key significance of Jask is that it is located outside the mouth of the Strait of hormuz on the Sea of Oman, meaning oil shipped from there may avoid any disruption to routes caused by the Islamic Republic’s showdown with the US and Saudi Arabia over sanctions and its refusal to respect the 2015 nuclear deal.
national Iranian Oil Co. (nIOC) subsidiary Petroleum Engineering and Development Co. (PEDEC) signed the deal with three Iranian industrial manufacturers to produce pumps for the pipeline that will run from Goreh, on the Per- sian Gulf in Bushehr Province, to Jask.
Iranian firms are relying on local technol- ogy to continue the expansion of Iran’s oil and gas industry because foreign companies are no longer willing to enter the marketplace due to anxiety that they might get hit by US sanctions.
Backed by the Ministry of Petroleum (MoP)
and Oil Minister Bijan Zanganeh, the contract is estimated to be worth $52.5mn with completion anticipated in 2024.
Of the $1.8bn total project cost, the Goreh- Jask pipeline is anticipated to come in at around $1bn, with up to $700mn being spent on the development of the port.
Downstream development
Iran has been planning since at least 2012 to set up a terminal at Jask Port (Bandar e-Jask), just outside the Strait of hormuz, the world’s busiest chokepoint for oil shipments.
In a speech, Zangeneh added that Iran would earn as much as $44bn in the next seven years from developing its petrochemical industry. he said that he hoped that exports and development of “value-added” petrochemical products made with Iran’s plentiful crude oil resources would help the country move forward.
On his ministry’s Twitter account, he added: “The project would transform the region as
Parties celebrate the signing of the deal tor PEDEC to produce the pumps for the pipeline.
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Week 40 08•October•2019