[Asia Economy Reporter Park Byung-hee] Bloomberg reported on the 15th (local time) that Iran has begun preparatory work for exporting liquefied natural gas (LNG). For Iran to export LNG, the Iran nuclear deal (JCPOA - Joint Comprehensive Plan of Action) must be restored and energy export sanctions lifted. Iran appears to be preparing in advance with the expectation that the nuclear deal could be restored.
Bloomberg cited a statement from the National Iranian Oil Company (NIOC), reporting that the NIOC has requested investors to submit proposals for a small-scale LNG development project by April 30. The NIOC did not specify the scale, timing, or location of the small-scale LNG development.
Iran's gas reserves are estimated to be the second largest in the world. Currently, Iran exports some gas to Turkey and Iraq. The United States, under President Donald Trump in May 2018, withdrew from the Iran nuclear deal and reinstated sanctions related to Iran's energy exports on November 5 of the same year, but allowed sanctions exemptions for Iraq, which imports LNG and electricity from Iran.
Iran is expected to be able to export large volumes of gas to Europe once export sanctions are lifted. Europe imports 40% of its consumed natural gas from Russia, but with Russia waging war in Ukraine, the future of Russian gas imports has become uncertain.
The European Union (EU) Commission proposed at the EU summit held in Versailles, France, on the 10th and 11th to gradually reduce the proportion of fossil fuel imports from Russia and achieve independence by 2027. The Commission proposed reducing Russian crude oil imports by two-thirds this year.
One year ago, the price of natural gas in Europe was 17 euros per MWh, but on the 15th, it recorded 112 euros per MWh. Earlier, on the 7th, it hit an intraday record high of 345 euros.
Bloomberg reported that at least eight LNG export projects in Iran have been halted due to sanctions and lack of capital. The halted projects include joint ventures with France's Total and Russia's Gazprom.
Hossein Amir-Abdollahian, Iranian Foreign Minister (left), and Sergey Lavrov, Russian Foreign Minister, shake hands at a joint press conference after their meeting on the 15th (local time) in Moscow, Russia. Photo by AP Yonhap News
On the same day, Iran's Foreign Minister Hossein Amir-Abdollahian met with Russian Foreign Minister Sergey Lavrov in Moscow and emphasized that discussions on restoring the Iran nuclear deal would continue.
The talks to restore the Iran nuclear deal, which were taking place in Vienna, Austria, fell into a deadlock after Russia's invasion of Ukraine and were ultimately suspended last week. Currently, delegations from various countries have returned to their home countries.
The United States, along with the United Kingdom, France, Russia, China, and Germany, began negotiations in Vienna in April last year to restore the 2015 Iran nuclear deal, and there were recent prospects of an imminent agreement. However, after Russia invaded Ukraine, Russia made new demands, causing the talks to stall. Russia reportedly demanded that Western sanctions imposed on Russia following the Ukraine invasion should not apply to future business with Iran. There appears to be some possibility of compromise between the West and Russia on this matter.
A senior U.S. State Department official stated, "The new sanctions against Russia are unrelated to the JCPOA and should not affect the implementation of the agreement." Minister Lavrov claimed that he received a "written guarantee" from the U.S. that American sanctions related to the Ukraine situation would not affect Russia-Iran exchanges after the JCPOA is finalized. Lavrov emphasized that the claim that Russia is obstructing the resumption of Iran nuclear deal talks is not true and that Russia supports the prompt resumption of the Vienna talks and the lifting of sanctions against Iran.
Minister Amir-Abdollahian also stated that the Ukraine situation has nothing to do with the nuclear negotiations.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
