Page 15 - FSUOGM Week 36 2019

FSUOGM POLICY FSUOGM
Russia considers Iran investment but Crimean oil swaps unlikely
RUSSIA
Oil swaps involving Crimea would not be economically viable.
RUSSIAN Energy Minister Aleksandr Novak said last week that Moscow was assessing possi- ble efforts that would support Iran’s oil industry as it struggles in the face of US sanctions.
Speaking at the three-day Eastern Economic Forum (EEF) in Vladivostok, Novak said that Russia was pursuing a plan with Iran “‘primarily for the development of the oil sector”, but did not elaborate.
He had met Iranian Energy Minister Reza Ardakanian in Moscow earlier in the week, fol- lowing which, Ardakanian was quoted as saying that Russia was considering providing around $10bn that could be injected into Iran’s oil sector.
These updates followed reports carried by Russia’s Tass new agency on August 27 quoting a Crimean official as saying that Iran could use ports of the Crimean Peninsula as a springboard for willing buyers of its oil.
Deputy Prime Minister of Crimea Georgy Muradov said: “For example, Iran could use our port facilities to transport oil and can take advan- tage of our shipping opportunities and river-sea canals, transporting oil over the Volga-Don canal,viaCrimea,totheBlackSea.”
Speaking to Middle East Oil & Gas (MEOG) this week, Mahmood Khaghani, former director general at the National Iranian Oil Co. (NIOC) and director for Caspian Sea Oil and Gas Affairs at the Ministry of Petroleum, said that this new offer was not like a resumption of the Russian swaps discussions with Iran that have been around for a while.
Ardakanian added that owing to US sanc- tions, the Suez Canal, via which Iran has histor- ically shipped most of its Europe-bound oil, had become a troublesome chokepoint for Iran in
recent months, meaning that shipments to Rus- sia could traverse the Caspian Sea.
However, Iran’s sole Caspian export terminal at Neka has a capacity of just 150,000 barrels per day (bpd), and MEOG understands that capac- ity there is already mostly taken up by exports to other Caspian littoral states. There have long been talks of swaps between Iran and Russia, but how exactly the Crimean option would work has not yet been disclosed.
Khaghani called the plans into question. “It would not be economically viable that oil would be shipped from Neka port to Russia while the same volume [would be] exported from Crimea or other ports from Russia,” he said by email. Despite the issues with ship- ments from Iran, it “would be more feasible [for] Iran to ship oil from the Persian Gulf on behalf of Russia to eastern market[s]”, Khaghani added.
According to the US Energy Information Administration (EIA), the terminal has mostly been used for swaps with Azerbaijan, Kazakh- stan and Turkmenistan. This arrangement saw crude arrive at Neka for processing at refineries in Tehran and Tabriz for domestic use in Iran. In return, the latter would export the same volume of crude from Kharg Island in the Gulf, though these arrangements too have been curtailed by sanctions.
Khaghani added: “Apart from that, I am sure Iran would not consider any swap via Crimea with Russia, as Iran has not yet officially recog- nised the annexation of the port to Russia. I am of the view we need to have our eyes on [a] Paris meeting in [a] follow up [to the] G7 summit ini- tiative by [the] French.” ™
Week 36 11•September•2019 w w w . N E W S B A S E . c o m P15