Page 6 - MEOG Week 10 2023
P. 6
MEOG PIPELINES & TRANSPORT MEOG
Iran to fine Pakistan over gas pipeline
IRAN THE state of Pakistan stands to be landed with up later that year in which Iran agreed not to pur-
an $18bn fine from neighbouring Iran if it fails to sue action in international courts and Pakistan
complete a natural gas pipeline project that has promised to complete the project and proceed
been under discussion for some 20 years. Con- with the purchase of Iranian gas by 2024.
struction was due to get underway in 2012-13 As nothing further has been completed by
and finish by 2014, but only the Iranian section Pakistan, the country now finds itself facing a
of the pipeline has been completed. steep fine that it cannot afford to pay.
Pakistan has failed to make progress on the Iran recently informed a visiting Pakistani
project so far because of the threat of sanctions delegation to Tehran that it considers the US
placed on Iran by the US. Pakistani officials have sanctions against Iran illegal and insisted that
been quoted in the local media as saying that Pakistan complete its side of the pipeline by Feb-
the funds are available for the project, but US ruary or March 2024. Pakistani officials recently
objections to Pakistan buying gas from Iran have informed a meeting of the country’s Public
prevented the government in Islamabad from Accounts Committee that Iran could claim a
proceeding. Washington has asked Islamabad to penalty of as much as $18bn.
abandon the project on several occasions. The finished Iranian section runs from Iran’s
Pakistan and Iran agreed to complete the southern gas fields to the Pakistan border. From
pipeline by 2014 and make it operational in 2015. there, the pipeline was to continue to the Paki-
Iran became frustrated with Pakistan’s lack of stani town of Nawabshah and connect with Paki-
interest in completing the project and threatened stan’s gas network.
in 2019 to take legal action against Islamabad as After several revisions to the project’s origi-
stipulated by the Gas Sales and Purchase Agree- nal deal, the pipeline would now supply Pakistan
ment. Under the original agreement, Pakistan with 8.7 bcm per year, while its maximum capac-
promised to pay Iran $1mn per day for each day ity would be 40 bcm per year. The diameter is to
after the agreed completion date until the pipe- be 56 inches and the length would be about 2,775
line is finished. A revised agreement was drawn km. The cost was estimated at $7.5bn in 2013.
Venezuela’s use of US naphtha rising
as Iranian condensate flows drop
IRAN VENEZUELA has become increasingly depend- Venezuela’s national oil company (NOC) PdVSA
ent on naphtha imported from the US as a dilu- increase crude production. The joint ventures
ent for heavy crude oil as condensate shipments cannot use Iranian condensate because OFAC
from have declined, according to a report from rules bar Chevron from using Iranian materials.
Argus Media. Citing data from the oil analytics Representatives of Chevron have confirmed
firm Vortexa, Argus Media reported on March 2 that the company is probably now produc-
that the US major Chevron had shipped around ing more than 90,000 barrels per day of crude
1.57mn barrels of naphtha from its Galena Park oil in Venezuela. (Independent observers and
terminal on the Texas coast to the Venezue- in-country sources have put the figure at about
lan port of Jose. The company was able to start 100,000 bpd.) The US major has said it hopes to
delivering naphtha to Venezuela after secur- bring production up to 200,000 bpd by the end
ing a six-month exemption from US sanctions of this year. PdVSA had previously viewed Ira-
in November. By contrast, a tanker from Iran nian condensate as a crucial means of pushing
offloaded about 440,000 barrels of South Pars up oil output, which has plummeted since the
condensate in January. This was the only Iranian imposition of US sanctions on the hydrocarbon
condensate cargo sent to Venezuela so far this sector in early 2019. Caracas and Tehran signed
year, and it marked a 78% drop on the 2mn bar- a 20-year agreement on energy co-operation
rels of Iranian diluent delivered in January 2022. in June 2022, and the Iranian side sent roughly
Chevron is the only US company that eligi- 8mn barrels of condensate to Venezuela in 2022,
ble to operate in Venezuela under the sanctions spread out over four shipments.
regime imposed by the US Treasury Depart- Venezuela uses both naphtha and condensate
ment’s Office of Foreign Asset Control (OFAC). as diluents for the transportation and upgrading
Under the exemption granted last November, of Orinoco extra-heavy crude oil. Most of the
known as General Law 41 (GL 41), it is send- South American country’s petroleum reserves
ing naphtha to help its joint ventures with are very heavy and viscous.
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