Dana Gas: Favourable ruling in Iran and Crescent Petroleum Tribunal

UAE-based energy firm Dana Gas has released a statement that an international tribunal has issued a favourable ruling in the dispute over a natural gas supply contract between Iran and Dana’s largest private shareholder, Crescent Petroleum.

The tribunal ruled that a 25-year contract for National Iranian Oil Co (NIOC) to supply gas to Crescent was valid and legally binding, and that NIOC had been obligated to deliver gas since December 2005, Dana said on 9 August.

NIOC and Crescent signed the 25-year contract in 2001, with the price tied to oil. Deliveries were delayed, however, as oil prices rose and some Iranian officials and politicians called for a revision to the gas pricing formula.

Crescent Petroleum initiated arbitration proceedings in July 2009; a three-person arbitration tribunal was formed under the terms of the 2001 contract.

According to Dana, NIOC first introduced gas into its transmission network and Dana’s UAE processing facilities for commissioning purposes in July 2010. The system had to be shut down again, however, when leaks were discovered in the transmission system.

Dana did not state when it expected gas supplies to start flowing again, but a source familiar with the matter said that supplies would not begin in the near term as subsidiary agreements needed to be reached and infrastructure work completed.

The contract provides for the UAE to import some 600 million cubic feet of Iranian gas per day, although the actual amount will depend on many factors and may only become clear in coming months. The UAE is eager to obtain additional natural gas supplies to support its rapid economic growth.

In the last few years, international financial sanctions imposed by the US and Europe over Tehran’s disputed nuclear programme have restricted trade between the UAE and Iran. Dana did not say whether the sanctions might complicate efforts to implement the gas supply contract.

For more news and expert analysis about Iran, please see Iran Strategic Focus.

© 2014 Menas Associates

Egypt: New government meets for first time to deal with strikes

Prime Minister Ibrahim Mehleb appealed to Egyptians’ sense of patriotism to go back to work and to call off their strikes which are crippling the national economy.

The labour unrest, however, is largely the making of government measures introduced over the past three years allied to the sense of people-power acquired since the protests started three years ago. Successive governments have sought to mollify public opinion by granting wage increases to public sector workers which are not sustainable, given the dire state of government finances. Furthermore, the increases have not been universally applied, with the police and army getting a higher increase and some workers, particularly in the transport sector, deemed ineligible for the minimum wage.

The prime minister promised to look into the demands of protesters, but it is unclear what he can propose to meet their grievances.

Those who have been on strike include bus drivers, postal workers, doctors, pharmacists and workers in the steel and textile industries. According to media reports, negotiations between the minister of communications and postal workers broke down when the minister said that there was not enough money to pay the workers what they were asking for.

The difficult economic conditions have been exacerbated by power cuts caused by a shortfall in the production and supply of natural gas to meet demand, rising at 8-10% a year.

Security challenges are also dampening economic activity. The tourism minister flew to Berlin for the major travel trade show and also to try to persuade the German authorities to reverse their advisory on citizens to avoid all of the Sinai Peninsula. The Egyptian authorities have sought to isolate Sharm el Sheikh and other resorts from the violence that has afflicted other parts of the peninsula, but the German government was unwilling to see the distinction.

For more news and expert analysis about Egypt, please see Egypt Politics & Security.

© 2014 Menas Associates

Baku interested in Iraqi natural gas

Azerbaijan has offered Iraq access to the Southern Gas Corridor, in a bid to help the war-torn country to export its gas to Western markets. Azerbaijani foreign minister Elmar Mammadyarov visited Baghdad on 10 February for talks with high-ranking Iraqi officials on deepening bilateral ties. 

“It is a huge project […] and it is open if Iraq has an interest in delivering its own natural gas,” Mammadyarov said during a joint press conference with his Iraqi counterpart Hoshyar Zebari. He added that other countries had already signalled to Baku their interest in contributing gas to the Southern Gas Corridor, although no details were revealed. 

Iraq produces limited quantities of natural gas, most of which is used for domestic consumption. Considerable volumes of associated gas is still flared due to the lack of facilities to use it more productively. But the government is increasingly focused on stepping production for export. 

During his meeting with Iraqi prime minister Nouri al-Maliki, Mammadyarov said that Azerbaijan was planning to open a full-fledged embassy in Baghdad in the near future. A permanent diplomatic mission in the Iraqi capital has already been authorised by the Azerbaijani parliament. “Our companies want to work and invest in Iraq, especially in its energy sector,” he added. 

Azerbaijan is not the only country interested in Iraq’s natural gas resources. Earlier this month, an Istanbul-based newspaper  quoted Turkish energy minister Taner Yildiz as saying that Ankara might prefer gas imports from Iraq to its current gas supplies from Russia, Azerbaijan and Iran. He said the price of Iraqi gas might prove much lower, because it would not have to cross foreign territory and would travel a shorter distance. 

Last June, Ashti Hawrami, minister of natural resources in Iraq’s Kurdistan Regional Government, told the press that his government envisaged the start of natural gas supplies to Turkey as early as 2016. At the initial stage, around 10 billion cubic metres of gas is planned to be supplied across the border. Iraqi Kurdistan is set to begin oil deliveries to Turkey this September.

For more news and expert analysis about the Caspian region, please see Caspian Focus.

© 2014 Menas Associates

Former head of GNPC says Ghana should focus on gas development

Former Ghana National Petroleum Corporation (GNPC) CEO Tsatsu Tsikata has warned the Ghana government to tread the 'oil path' with care and to implement pragmatic policies in order to make the most of oil revenue.

Speaking about the energy sector at an insurance forum in Accra, he said lessons should be learnt from the country's gold mining industry: “If gold has not made us rich over a century, why should we think oil will do it overnight?,” he asked delegates.

He also asked the government to focus on the development of natural gas, rather than oil, as this would push the country's development agenda further. It was critical to diversify Ghana's power supply in order to move forward, he said.

He told delegates that natural gas development, power generation and transmission all present major opportunities for the insurance industry. He urged local insurance companies to start targeting opportunities in the petroleum sector sooner rather then later to ensure that Ghanaian firms are fairly represented in the field.

For more news and expert analysis about Ghana, please see Ghana Politics & Security.

© 2010 Menas Associates

Algeria's oil and gas output to dwindle in 2011

Algeria's Finance Ministry has said that it expects the country's energy production and exports to drop in 2011, judging by the oil and gas earnings which are down by 4.5 per cent this year. Revenues from oil and gas exports are expected to decline from $44.2 billion to $42.2 billion this year and further next year.

Speaking about the forecast for 2010 Algeria's Finance Minister Karim Djoudi confirmed that “production and exports will decline”. Algeria is the world's eight largest crude oil exporter and supplies a large portion of Europe with its energy demand.

Earlier this year, Algeria's liquid natural gas production capacity was cut by 20 per cent, in what some believe was a sign of broader problems. However, Algeria's Energy Minister Yousef Yousfi said that liquid natural gas capacity will be back to normal within a few months.

It is thought that Algeria's energy sector economic output could shrink 0.8 per cent next year, proving to be the third successive year of negative growth for the energy sector. Any reduction in energy revenues might have a significant impact on Algeria's economy with oil and gas accounting for more than 95 per cent of the country's exports.

Source: Reuters

For more news and expert analysis about Algeria please see Algeria Focus and Algeria Politics & Security.