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.™

       P6                                       www. NEWSBASE .com                         Week 10   08•March•2023
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