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Created: Sun Sep 7 21:48:49 2008
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ENERGY
TEHRAN TIMES INTERNATIONAL DAILY SEPTEMBER 8, 2008
3
Persian Gulf arab
PGCC oil output to
rise 10m bpd by 2015
Iran to build dams, power states to urge
OPEC not to cut
DUBAI (Trade Arabia) -- A massive $300 billion investment to boost
oil production is under way in the Persian Gulf and this could see
the region deliver a staggering 10 million barrels of crude a day in
added capacity by 2015, according to a study.
plants in 10 countries
Tehran Times Economic Desk
oil output:
Week Ahead
More than half of this increase will come from Saudi Arabia alone, ac- TEHRAN -- Iran's Energy Minis- LONDON (Bloomberg) -- OPEC's
cording to the study by project research firm Proleads. try plans to construct dams and Persian Gulf-Arab members,
"Recent analysis of total global oil production and development power plants in 10 countries, the which pump half of the group's oil,
projects that world crude production capacity from all sources has the deputy energy minister for water are likely to urge their colleagues
potential to rise from 87 million barrels per day to as much as 108 million and wastewater affairs said here to leave output unchanged when
by 2015," said Emil Rademeyer, director of Proleads. on Sunday. they meet this week as prices
"Our analysis shows that if all current projects across the region meet "The Sangtudeh dam and its above $100 a barrel squeeze the
their projected targets in barrels of oil a day, it would mean that by 2015 220MW power plant in Tajikistan is global economy.
the hydrocarbon rich countries of the Persian Gulf Cooperation Council one of the projects," IRINN quoted Saudi Arabia, the world's big-
(PGCC) will be supplying more than half that future added oil capacity," Rasul Zargar as saying. gest producer and de facto leader
said Rademeyer. "Iran is also involved in a joint of the 13-member Organization of
The Proleads analysis also reveals that within the PGCC countries venture with Azerbaijan for building Petroleum Exporting Countries, the
of Bahrain, Oman, Kuwait, Qatar, Saudi Arabia and the UAE approved a dam and hydropower plant," he United Arab Emirates, Qatar and
upstream oil projects designed to either maintain or increase production said, adding that the project's feasi- Kuwait may reject calls from Vene-
capacity have soared in value from below $1.5 billion in 2006 to a 2008 bility studies have been finished. zuela and Iran to trim supplies at its
peak of $30 billion. Across the PGCC, Proleads is also tracking a record "Preliminary studies for the con- Sept. 9 meeting in Vienna, accord-
of nearly 300 active upstream oil projects with a combined value of al- struction of a dam and hydropower ing to 29 of the 32 energy analysts
most $300 billion. plant on the Aras River in Armenia are surveyed by Bloomberg.
"Saudi Arabia is leading the way and would contribute more than half being conducted," Zargar stated. Most OPEC members "don't
the 10 million barrels a day in added capacity if all projects deliver on The ground has been broken in want to send prices skyrocketing by
target by 2015," Rademeyer added. "Saudi Arabia, with one-fifth of the a project to construct a power plant Turkmenistan-Iran border, the Anzab cently been inked with Turkey announcing a cut," said Mike Wit-
world's proven oil reserves and some of the lowest production costs has in Sri Lanka at an estimated cost of tunnel in Tajikistan, a wind power plant based on which Turkish investors tner, head of oil research at Soci-
an aggressive energy sector investment initiative." 520 million, he said. in Armenia, and the Iran-Armenia gas will participate in the construction ete Generale SA in London. OPEC
Between this year and 2009 alone, Saudi Arabia has put in place The ministry also plans to build pipeline," he stated. of a hydropower plant in Iran and "probably doesn't want to see an-
projects with target added production capacity of more than 1.6 million power stations in Syria and Iraq, he Similar projects are underway in will use the generated electricity in other run at $150."
barrels a day. By 2015, projects in Saudi Arabia are targeting 5.2 million noted. Iran has already built the Doos- Pakistan and Mali, Zargar mentioned. the BOT (build, operate, transfer) Producers may not act to stem
barrels a day in added capacity. By 2010, Qatar - richer in gas than oil - ti Dam northeast of Mashhad near the A letter of agreement has re- method. oil's decline, down more than 25
is targeting an increase of 1.4 million barrels a day in added production percent from its record $147.27 on
capacity. Projects approved in the UAE indicate added oil production
capacity of almost 1.9 million barrels a day by 2013.
Gazprom to receive 7 natural Santander, Fenosa in talks July 11, as global economic growth
slows, denting demand for energy
Current approved projects in Kuwait indicate an increase in capacity of gas field licenses in September over Cepsa stakes: media and ultimately reducing their in-
around one million barrels a day by 2011 but this does not take account come. The Persian Gulf states have
of expected developments in the country's northern fields which have YAKUTSK (RIA Novosti) -- Gazprom is planning
MADRID (Reuters) -- Santander and Union Feno- used the six-year commodity boom
yet to be approved. Oman, where fields have been depleting, hopes to to receive licenses for the development of seven
sa are close to a deal to sell stakes in Cepsa to to try diversifying their economies
achieve added capacity of around 460,000 barrels a day by 2012. Bah- strategic gas fields in Russia by the end of Sep-
Abu Dhabi state-owned investment firm IPIC, into new industries such as tourism
rain, where oil production has peaked, expects to only increase capacity tember, the Russian energy giant said on Sun-
Spanish media said on Saturday, citing sources and finance, while contending with
by 35,000 barrels a day by 2015. day.
close to the talks. record inflation.
One of the major revelations of this latest analysis of active projects On September 2, Gazprom already received licenses
Spanish bank Santander owns around 31 percent Oil declined $1.66 to $106.23 a
is the continued failure of Iraq to significantly add to its oil production for the Chayanda, Kirinskoye, Semakovskoye gas fields
of the energy company while Spanish utility Union barrel on Sept. 5 as the dollar halted
capacity with only an extra 300,000 barrels a day projected by 2013. from the list of 10 federal fields, which were earlier trans-
Fenosa owns around 5 percent. a three-year slide against the euro
"Iraq has the world's third largest proven petroleum reserves but ferred to the company without a tender.
The International Petroleum Company (IPIC), and Hurricane Gustav caused al-
only a fraction of its known fields are in development," said Rademeyer. "The remaining seven licenses have already been
which invests in gas and oil assets for the govern- most no damage to drilling platforms
"Iraq's oil infrastructure is in clear need of massive modernisation and signed by the agency and will be signed by Gazprom
ment of Abu Dhabi, already owns 9.5 percent of Ce- and refineries in the Gulf of Mexico.
investment and has so far been unable to meet production and export in the near future. They will also be registered in Sep-
psa. Blessing in disguise
targets." tember," deputy chairman of Gazprom's management
Acquiring Santander and Fenosa's stakes would Falling oil prices and the simul-
Not all of this added oil capacity will be exported as crude. "Much will committee, Alexander Ananenkov, told journalists at an
give it over 45 percent in the company, making it the taneous strengthening of the dollar
be destined for the booming regional domestic markets where new re- economic forum in Yakutsk.
second largest shareholder behind the French oil may benefit Middle Eastern coun-
finery and petrochemical projects are also at a record level," Rademeyer The Russian government ordered in mid-April the
group Total, which owns 48.8 percent. tries by sucking up excessive liquid-
said. "Clearly, some will also offset declining production in some fields transfer without a tender to Gazprom of the country's
Negotiations are still ongoing and will continue ity in the region, said Robert Mckin-
and areas as well as extending the life of existing oilfields." largest oil and gas condensate field, the Chayanda field
over the weekend, sources close to the talks told non, Head of Research at Dubai's
"Most of the current projects will use enhanced oil recovery techniques in Yakutia.
Spanish daily newspaper El Mundo. Al Mal Capital PSC.
that can suck up 70 per cent of the oil compared with conventional ex- In July, it has transferred to Gazprom, also without a
Santander and Fenosa are selling their stakes in "The stronger dollar is attracting li-
traction of only around 35 per cent." tender, another nine federal gas fields, following instruc-
Cepsa together, with Santander leading the talks, quidity out of the region, slowing down
Saudi Arabia currently maintains the world's largest crude oil produc- tions from former premier Viktor Zubkov.
said financial daily Expansion. the economy, which is what people
tion capacity, estimated to be around 10.5-11 million barrels per day. It Gazprom will pay at least $340 million for the license
The stakes are worth up to 7 billion euros on Ce- want to combat inflation," Mckinnon
raised output in July to the highest in more than 25 years. to develop the Chayanda field with proven reserves of
psa's current share price, although they are likely said. "At $80-$90 a barrel, the region's
Meanwhile Abu Dhabi, owner of the world's fifth-biggest oil reserves, 1.24 trillion cubic meters of gas and 50 million metric
to change hands for less than market value, some economies are still fundamentally
recently announced it intends raising crude production by 30 per cent to tons (about 370 million barrels) of oil, and will start its
sources close to the deal told the paper. sound -- as long as oil remains above
3.5 million barrels a day by 2010. development already in 2008.
Santander and Union Fenosa both declined to about $50 a barrel, most government
"However growing economic gloom worldwide could put a brake on in- Ananenkov also said that Gazprom had increased its
comment on the reports. budgets are in surplus."
creasing energy use," warns Rademeyer. "These concerns are shared by projected investment for next year by 15%, from 850 bil-
Spanish utility Gas Natural, which is in the proc- Inflation has accelerated to
some within OPEC who think that future demand for oil may not be strong lion rubles ($34 billion) in 2008 to 1 trillion rubles ($40
ess of completing a 16.8 billion takeover bid for records across the Persian Gulf as
enough to justify the huge investment in boosting production. Algeria's en- billion) in 2009.
Union Fenosa had already said it would sell the oil-fueled economic growth creates
ergy minister Chakib Khelil, for example, has talked of `big uncertainties' Half of the investment in 2008 will be allocated for
Cepsa stake. shortages of housing and services,
about making huge investments in infrastructure to increase output." capital expenditures, he added.
while the weaker U.S. dollar and
Dubai-based ProLeads provides up-to-date and detailed project in- higher global food prices make im-
formation across the fundamental industries of civil construction, oil and
gas, petrochemicals, power, water and industrial.
Key to the cartel: OPEC's leading figures ports more expensive. Inflation in
Saudi Arabia, the biggest economy
Proleads is currently tracking in excess of 5,200 individual projects OPEC, the producers' cartel, in- Ali al-Naimi ics, said: "OPEC's most powerful in the Middle East, accelerated to a
worth in excess of $4 trillion across the region in the oil and gas, petro- cludes 13 nations, but there are Minister of petroleum and member, Saudi Arabia, is sensitive record 11.1 percent in July.
chemicals, civil construction and, power, water and industrial sectors and essentially three leading figures mineral resources in to western public opinion and will The six Persian Gulf Arab states,
is the mostly widely referenced database of its kind in the Middle East. who dictate the direction of oil Saudi Arabia not want to be seen putting renewed which include non-OPEC Oman
prices: A former shepherd, this mod- upward pressure on oil prices at a and Bahrain, earn a further $55 bil-
est man also keeps his comments time when global economic growth lion per year each time the oil price
in front of the media short, earning is slowing." jumps $10 a barrel, Merrill Lynch &
IN THE NAME OF GOD himself the sobriquet The Silent Gholam Hossein Nozari
T Co. said in July.
CE MEN
OUN
Saudi. He is aware that any slip of Iran's minister of petroleum Persian Gulf markets
NN
ND A the tongue could add or subtract bil- Iran often calls for produc- last week
SECO lions of dollars in investments on the tion cuts when other countries are Persian Gulf stocks retreated last
oil markets. more reluctant. Nozari recently said week on concern lower oil prices will
But behind the scenes, the Saudi pumping more oil would do noth- dent government surpluses in the oil-
National Iranian Oil Co. technocrat is expansive, keen to use ing to stop the surge in prices, after rich region. Saudi Basic Industries
his enormous knowledge and ex- Saudi Arabia revealed that it may Corp., the world's biggest chemicals
IRANIAN OFFSHORE OIL CO. pertise to guide members of OPEC be increasing its production again. maker by market value, and Indus-
or other groups to sensible and rela- "Increased oil production does not tries Qatar led the decline.
TENDER NO.: FBS-8700321 tively conservative solutions. have such an impact that it would "The drop in oil prices is concern-
****************************************************************************** Saudi Arabia might have the decrease prices, because enough ing investors," Adel Waleed Nasr,
IRANIAN OFFSHORE OIL CO INTENDS TO BUY: P/F GAS COMPRESSOR strength of being the biggest oil exists in the global market," he local brokerage manager at United
oil producer, but it takes skills said. "Just compare 300,000 barrels
APPLICANTS MAY REFER TO SITE (WWW.IOOC.CO.IR) OR TO BELOW to negotiate a position that will per day with about 86m, which the
Securities LLC in Muscat, said in a
phone interview. "They are worried
MENTIONED ADDRESS: help the west when dealing with markets need. What would be the that oil may keep sliding and that
ROOM NO. 6 11 6TH FLOOR NO. 38 TOURAJ STREET, VALIASR AVE., OPEC members that include effect?" the drop will weigh on government
Venezuela and Iran. He has often Rafael Ramirez surpluses across the Persian Gulf."
CHAMERAN/MODARRES CROSSROAD, TEHRAN-IRAN supported an increase in oil sup- Venezuela's oil minister All seven Persian Gulf stock in-
POSTAL CODE: 19395, P.O.BOX: 5591, PROCUREMENT AND MATERIALS ply to placate important friends in Venezuela is a hawkish member dexes tracked by Bloomberg de-
the west. of the cartel who often demands
FOREIGN PURCHASING DEPARTMENT. CONTACT: Saudi Arabia is currently pump- cuts in production to boost the price.
clined last week. Oman's Muscat
Securities Market 30 Index slid 9.1
FAX: (98)-21-22664250-1 E-MAIL: MPD@IOOC.CO.IR ing flat out, adding 200,000 barrels Ramirez believes that OPEC does percent, its biggest weekly slump in
of oil a day in June with a view to in- not need to increase its supply. "We at least five years. Saudi Arabia's
PUBLIC RELATIONS creasing capacity to 12.5m a day by don't see a need to increase oil pro- Tadawul All Share Index dropped
the end of next year. Hugo Navarro, duction ... The market is well sup- 4.4 percent, while measures in Ku-
IRANIAN OFFSHORE OIL COMPANY a specialist on international oil mar- plied," he said. wait and Dubai retreated 3.7 percent
kets at consultants Capital Econom- (Source: Guardian) and 2.1 percent respectively.