4
Petchem exports
April 24, 2017
Iran plans to export over 25 million tons of petrochemical products in the
year to March 20, 2018, said head of National Petrochemical Company
Marzieh Shahdaei.
Domestic Economy
Tehran conference an opportunity
to study virtual water theory globally
O P I N I O N
OPEC and non-OPEC
cooperation, the trend
of oil prices
By Heshmatollah Razavi*
Three years ago at this time, oil prices were above $110 per
barrel or twice the current level. However, during 2014 and
the two subsequent years, oil prices went down continuously
to reach less than $30 per barrel in April 2016.
After that, OPEC and non-OPEC countries tried hard
to put a floor under crude prices and restore stability to the
market through joint efforts and forging a freeze plan even
though they had a bumpy road ahead to achieve this.
Many views surfaced to explain why oil prices collapsed
and OPEC and non-OPEC could not come to an agreement to
bring stability to the market immediately.
Some experts said Saudi Arabia had waged a price war to
obtain a larger market share. Others said it was an initiative
taken by Saudi Arabia and other OPEC members to force the
US shale oil producers out of the market. Some analysts however believed it was part of regional rivalry between Saudi
Arabia and Iran which was negotiating with P5+1 on its nuclear program, forcing it to give more concessions before lifting sanctions against its economy including oil exports.
Others contended that it is part of a political tension
launched by Saudi Arabia and its Western-backed allies to
put pressure on Russia, which supports President Bashar alAssad in the ongoing conflict in Syria. It was supposed that
lower oil prices had been engineered to force Russian to stop
supporting the Syrian government.
Apart from these views about why oil prices collapsed dramatically, now the scene has changed in a fundamental way.
OPEC and non-OPEC countries have reached an agreement to reduce oil production by 1.8 million barrels per day
even though Russia still supports the Syrian government and
Iran has not taken any responsibility in cutting its oil production and goes ahead with rising oil production since the lifting of the sanctions at the start of 2016.
After all, it seems it was a huge budget deficit, nearly $100
billion, at the end of 2015 and the resulting pressures on its
economy that prompted Saudi Kingdom to think more seriously about coming to an agreement with other OPEC members and producers outside the organization, including Russia, about cutting oil production.
This goal was achieved during hard talks that were held
among the key players of the oil market in 2016, although
at first, they failed. In the Doha meeting in April 2016, then
Saudi oil minister, Ali Al-Naimi, insisted that Iran, which
had announced it would not take part in any freeze or oil cut
plan unless its oil production reaches pre-sanctions level of 4
mbd, should take part in any freeze plan on which OPEC and
non-OPEC would reach agreement. When Riyadh could not
convince other oil producers on Iran, Doha meeting ended in
failure and oil prices fell to around $26 per barrel.
Hoowever, after the Doha meeting, some changes took
place that raised the hopes of reaching a kind of agreement.
First of all, Al-Naimi was sacked and replaced by Khaled AlFalih as Saudi oil minister who had new ideas.
Newly appointed oil minister adjusted the Saudi stance
so that the way was paved for reaching a consensus within
OPEC on cutting oil production in order to lift prices.
Secondly, after many years of disagreements, OPEC
members, during the 169th meeting in June 2016 in Vienna,
reached a consensus on choosing Mohammad Barkindo as
the new secretary general to replace Abdullah Salem AlBadri. He took office at the beginning of August 2016.
Thirdly, great efforts by Algeria oil minister and newly
appointed OPEC secretary general to bring OPEC members
together and hold an informal meeting in Algeria on the sidelines of the International Energy Forum in September 2016
was another important step toward reaching a final agreement, first among OPEC members in their ordinary meeting
in November 2016 in Vienna and then in December with nonOPEC oil producers. Despite these ups and downs in the way
of collective efforts and reaching an agreement on boosting
oil prices, the prices are still way out of what many OPEC
members, including Venezuela, consider as fair.
Now, in view of the cooperation between OPEC and nonOPEC, oil prices are twice the figure it was a year ago when
negotiations between OPEC and non-OPEC failed in April
2016 in Doha, but at the same time, they are half the amount
it was at this time three years ago.
It seems that in addition to some physical factors, including relatively high inventories, some psychological factors
are playing a role in oil prices remaining at the existing level
of $50-$55 per barrel.
The end of what was called Arab Spring and its destabilizing effects on Middle East countries, the peaceful settlement
of Iran’s nuclear dispute and subsequently the lifting sanctions on Iran’s oil exports are among the reasons that would
apparently prevent oil prices going beyond the current levels.
Furthermore, shale oil phenomenon and its viability
through technological breakthroughs have changed the assumption of Peak Oil Era to Abundant Oil Era and that is why
it is expected that oil prices would remain more and less at
the current range of $50 to $60.
OPEC and 11 non-OPEC oil producers, which produce
almost two-third of global oil, despite their firm commitment to cuts, which in March stood at more than 100 percent
among OPEC members, have not been able to push prices
above $60 and it is likely that prices remain at below sixty
for the rest of 2017. On the other hand, it is likely that prices
would fall below $50 if OPEC does not extend its cut plan
in its ordinary meeting on May 25 and fails to bring global
inventories down to the industry’s five-year average during
the abundant oil era.
* Heshmatollah Razavi is an economic analyst.
Domestic Economy Desk
A
n Iranian agricultural official has
said it is not logical to achieve
self-sufficiency in the production
of a crop at all costs, adding other factors
and aspects need to be taken into account
when making efforts to that end.
The head of the National Center of
Strategic Studies of Agriculture and Water at Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA),
Mohammad Hossein Shariatmadar, said
becoming self-sufficient in the production of a crop becomes valuable when
the production of a crop is increased by
using modern technologies, drawing up
precise plans and improving productivity
and the growth is sustainable, according
to a report by otaghiranonline.ir.
Addressing a press conference on the
First Virtual Water International Conference to be held in Tehran on April 29 and
30 organized by ICCIMA, Shariatmadar
highlighted the need to design an effective strategy to implement the theory of
virtual water.
He added the international conference will be an effort to take a look at the
theory of virtual water at the global level
to improve the management of the countries’ water resources.
“No global consensus has yet been
reached on commercializing agro products and putting the theory of virtual
water into practice. The theory has only
been implemented in a number of countries.”
Shariatmadar said the theory has existed in Iran since the very beginning of
agricultural activities, adding, however,
it has never had any international dimensions and has never been implemented
systematically and legally.
“Since the process of putting the theory into practice can involve a remarkably
large number of complexities and details,
otaghiranonline.ir
it is required to carry out a precise and
comprehensive study of the likely consequences and outcomes, prior to initiating
it.”
He noted that the international conference is an opportunity to create an
atmosphere and virtual space, supported
by world thinkers, international organizations and countries, in which those interested in the theory of virtual water can
find information and seek consultation.
“Effective strategies should be mapped
out to avoid probable unwanted political
and social dependence and impositions
at the stage of putting the theory into
practice. Moves and behaviors should be
managed and steps should be taken with
great care.”
Shariatmadar, who is also the executive secretary of the upcoming international conference, said identifying proper
cultivation pattern is among the main
bases of the theory. It further seeks to
define cultivation pattern in developing
farming in each region in proportion to
its capacities and potentials.
“For years, we have been speaking of
self-sufficiency in wheat production in
Iran. Efforts to this end are required to
be made on the basis of the cultivation
pattern. All Iranian officials unanimously agree that it is of no value to become
self-reliant in the production of a crop at
all costs. They maintain that this process
should be undertaken in proportion to the
capacities and with an eye on improving
productivity.”
Shariatmadar recalled that in 1989,
Iranian farmers produced 300 grams of
wheat using one cubic meter of water for
irrigation, adding the figure experienced
numerous fluctuations over the past
years, amounting to 530 grams in 1998
and 630 grams in 2004 and 2005.
“In 2005, we celebrated our self-sufficiency in wheat production. The fluctuations, nevertheless, continued until
in 2015 and 2016 wheat harvest using
each cubic meters of water reached 750
grams. At present, we are required to
sustain this level of production and even
raise it.”
Roadmap
Speaking at the same confab, Abbas
Keshavarz, the deputy Agricultural Jihad
minister and a member of the upcoming conference’s executive and scientific committee, said achieving a national
consensus would be the first step in implementing the virtual water theory.
“We are primarily required to identify
the theory’s weaknesses, strengths, advantages and shortcomings to be able to
put it successfully into practice at a national level. The conference aims to prepare a logical roadmap for implementing
the theory.”
He maintained that only those countries which have managed to bring the
prime cost of the crops down, raise water
productivity and, thus, generate a high
value added in their agro sectors have
been successful in effectively putting the
theory into practice.
“Currently, the Netherlands, as a developed country in this field, exports
science and technology instead of agro
products.”
Keshavarz said at present, the world
has not managed to reach a consensus
on commercializing agro products, as all
countries are concerned about food security and attach great importance to it.
Bahram Taheri, an advisor to Energy
Minister Hamid Chitchian and the scientific secretary of the upcoming conference, noted that given the climatic
changes, it is necessary to use infrastructural methods to manage water resources.
He added using virtual water is an effective mechanism.
At the same conference, Zahraei, a
member of the academic board of University of Tehran, stressed that engaging
in virtual water trade is not panacea to
be prescribed for any country suffering
from water crisis.
She added, “We seek to use other
countries’ experiences to gain a more
precise and comprehensive knowledge of
the theory of the virtual water.”
Iran, EU agree on agricultural partnership
Iranian and European Union officials in a meeting in
Tehran agreed to broaden cooperation in the fields of agriculture and commerce.
The agreement was reached between the officials from
the Iranian Agricultural Jihad Ministry and the European
Union in a meeting in Tehran on Sunday, reported Fars
News Agency.
During the meeting, members of the EU Commission for Agriculture and Rural Development voiced their
readiness to transfer latest agricultural technologies to
Iran.
Director General of Agriculture and Rural Development in the European Commission Jerzy Bogdan Plewa
voiced readiness to strengthen cooperation and trade in
the agriculture sector between the EU and Iran.
Envoy: Iran-Denmark
trade doubles
Copenhagen and Tehran have considerably broadened
trade transactions in the post-sanctions era, said Danish
Ambassador to Iran Danny Annan.
According to Fars News Agency, Annan noted, “Trade
exchanges between Denmark and Iran has increased in recent years and doubled in the past two years.”
Medicine and medical equipment constitute the lion
share of Denmark’s exports to Iran, he said, adding, foodstuff raw materials and industrial machinery may also find
a place in the basket of his country’s exports to Iran.
In September, Iran’s Energy Minister Hamid Chitchian
and his Danish counterpart Lars Christian Lilleholt in a
meeting in Copenhagen underlined the need for expanding
cooperation in economic fields, specially renewable energies.
During the meeting, the two sides explored avenues for
bolstering bilateral ties, particularly in the field of renewable energies.
“Cooperation in the field of renewable energies serves as
the pivot for future Iran-Denmark cooperation,” Chitchian
said.
The Iranian energy minister also called for collaboration
on renewable energies, promoting water resources quality
and recycling waste water.
Pointing to the ministry’s commitment to environmental
considerations while implementing projects and Iran’s voluntary participation in Paris International Forum’s agreements, Chitchian said, “Given Denmark’s capabilities as
well as Iran’s unparalleled capacities in the fields of wind
and solar powers, promoting renewable energies application can serve as the basis of mutual cooperation in the future.”
IRNA
“The EU is eager to help Iran promote standards of
food production and transport these products with high
technology,” he added.
He further noted that the EU could assist Iran in other
fields such as genetically modified seeds, agricultural
machines, irrigation systems and modern greenhouse
technology.
Deputy Director for Agricultural Planning, Economic
and Rural Development Research Institute (APERDRI)
at Iran’s Agriculture Ministry Ali Kianirad presented
a report on the capabilities, capacities and programs of
the country’s agriculture sector which accounts for 11.6
percent of GDP, and said, “The figure will climb to 32.5
percent if pre- and post-agricultural businesses and industries are included.”
Official: Total will
finalize South Pars...
From Page 1
Last November, Total signed
a preliminary agreement, worth
$4.8 billion to develop South
Pars Phase 11 in cooperation with
China’s CNPC and Iran’s Petropars.
Phase 11 aims to produce 1.8
billion cubic feet of gas per day
for the national grid.
Total CEO and Chairman Patrick Pouyanné said in February
that a final investment decision
over the project hinges on whether the US would renew sanctions
waivers against Iran or not.
Managing Director of National
Iranian Oil Company (NIOC) Ali
Kardor said in March that Total
would finalize South Pars Phase
11 agreement within weeks.
“The [French] company has
already allocated $15 million to
this project in accordance with
the first phase of the contract,”
Kardor was quoted as saying.
Iran has signed a flurry of deals
with Western companies over
the past year since the easing of
international sanctions on Tehran
after an accord was reached over
its nuclear program.
Iran needs foreign investment
for repairs and upgrading of its
oil and gas fields. It also seeks the
transfer of technology to its oil
industry after a decade of sanctions.
Shell signed a provisional deal
in December to develop Iranian
oil and gas fields South Azadegan, Yadavaran and Kish in December 2016.
Iran has named 29 companies
from more than a dozen countries
as being allowed to bid for oil
and gas projects using the new,
less restrictive contract model.
The firms include Shell,
France’s Total, Italy’s Eni, Malaysia’s Petronas and Russia’s
Gazprom and Lukoil, as well as
companies from China, Austria,
Japan and other countries.
Russia’s Zarubezhneft signed
an MoU for a feasibility study on
two joint fields in the west of the
country.
Norway’s International Aker
Solutions Company signed an
MoU to modernize Iran’s oil industry.
Last May, Austria’s OMV
signed an MoU for projects located in the Zagros area in western Iran and the Fars field in the
south.
South Korean Daewoo Engineering and Construction
(Daewoo E&C) signed an MoU
to construct an oil refinery in
Bandar Jask, on the southern
coast of Iran.
Italy’s Saipem signed MoUs
to cooperate on pipeline projects,
upgrading of refineries and development of Tous gas field in the
northeastern province of Khorasan Razavi.
Norwegian oil and gas company DNO said it was the second
Western energy company after
Total to sign a deal with Iran under which it agreed to study the
development of the Changuleh
oilfield in western Iran.
Lukoil, Russia’s second biggest oil producer, hopes to reach
a decision on developing two
new oilfields in Iran.
Germany’s Siemens AG signed
an MoU in May to overhaul
equipment and facilities at Iran’s
oil operations and refineries.
BASF’s Wintershall oil and
gas exploration subsidiary signed
an MoU with the National Iranian Oil Company in April 2016.