Page 49 - IRANRptJul22

Iran moving forward to execute condensate-for-cru de swap deal with Venezuela
Iran announces South Pars gas field deal with foreign firm
analyst, Homayoun Falakshahi. "Exports of Urals to China have more than tripled. That comes despite a weakening in Chinese imports.”
Yet whilst on the surface indications point to Russia and Iran competing for Asian buyers, it is thought that the countries are actually working together to help Russia keep its export infrastructure alive. Iran has years of experience in maintaining exports whilst under international sanctions.
Iran appears to be moving forward with implementation of the co-operation deal signed during Oil Minister Javad Owji’s visit to Caracas early last month.
That agreement provides for Iran to supply the South American country with refinery equipment, as well as assistance with overdue work at the state-owned El Palito refinery in Carabobo. The 140,000 barrel per day (bpd) facility has not been able to keep to its regular repair and maintenance schedule, as its owner, the national oil company (NOC) PdVSA, is a target of US sanctions.
The recently penned deal between Tehran and Caracas also provides for Iran to send shipments of gas condensate to Venezuela in exchange for Venezuelan crude. PdVSA is already using Iranian condensate to dilute and upgrade extra-heavy oil from the Orinoco belt into an exportable grade of synthetic crude.
Since last autumn, deliveries of this blendstock have played a significant role in helping Venezuela’s oil sector recover from the ravages of the sanctions. As a result, production levels rose to 700,000 bpd in the first four months of 2022, marking a stark rise on the 470,000 bpd figure posted in the same period of last year.
Meanwhile, Iran is expanding the range of blendstock deliveries to Venezuela. Citing data from the oil analytics firm Vortexa, Argus Media reported last week that the Iranian tanker Dino was expected to discharge 370,000 barrels of Iranian Heavy crude at Venezuela’s Jose terminal soon. This grade, which has a specific gravity of 29.5 degrees API, is a lighter alternative to Venezuelan’s Merey grade, which has a specific gravity of 16.2 degrees API.
The recent uptick in Iranian shipments to Venezuela is happening as Chinese demand for Iranian crude slips as a consequence of lockdowns related to coronavirus (COVID-19). This drop in demand has freed up Iranian inventory, and much of this has been rerouted to Venezuela instead. Whether this ramped up supply will persist in the future remains to be seen, though.
As the main purchaser of both Iranian and Venezuelan crude exports, China has significant leverage over both nations’ export plans. Meanwhile, as Argus noted, there is another factor in play – the availability of extra cargoes from Russia, which is another major supply source for the Chinese market. In the event that Chinese buyers opt to purchase Russian Urals crude that has been heavily discounted because of Western sanctions, Iranian and Venezuelan exports to China could decline.
The National Iranian Oil Co. (NIOC) this week confirmed the signing of an investment deal with a foreign company for the development of the oil layer of the supergiant South Pars gas field.
A statement from NIOC’s manager for investment and business affairs, Fereydoun Kord-Zanganeh, said that a $530mn agreement had been struck during the previous Iranian calendar year, which ended on March 22, though it noted that the details of the deal remain confidential.
The Islamic Republic has expanded gas output significantly at South Pars in recent years and supplies are estimated to flow at an average of 850-950mn cubic metres per day, topping out at 1bn cubic metres. Last year, NIOC
49 IRAN Country Report July 2022 www.intellinews.com