Blows to Iranian oil industry with loss of investor and refiner
In another blow to Iran’s hopes for economic recovery, leading Russian and Indian oil companies say they will cut links with the Islamic Republic amid threats of US sanctions.
Lukoil, Russia’s second biggest oil producer, said on Tuesday that it will not proceed with projects.
An official said, “Considering the latest developments, I guess, it’s too early to say what our plans will be. For the moment, basically, we have everything on hold.”
Lukoil had been in talks over development of Abe Timur and Mansuri oilfields in west-central Iran. Memoranda of understanding were signed in 2016, and the company said in January 2017 that it hoped for a decision in the first half of the year on development although there “are no strict deadlines to the process”.
As Lukoil said its first-quarter net profit rose 75% over the previous year, the official said the company is focused remained on its domestic business: “We don’t plan to do anything material on the international side.”
Can Indian Investment Be Saved?
India’s Reliance Industries, which owns the world’s biggest refining complex, has told the National Iranian Oil Company that the firm will stop oil imports from Tehran in October or November, according to “two sources familiar with the matter”.
The warning raises a question mark over statements by the Indian government this week that it will defy US sanctions and continue to import oil and pursue other business with Iran.
Despite New Delhi’s statement, Reliance is reportedly at risk because some insurance companies have said they will withdraw coverage of Iranian transactions.
The company’s imports from Iran rose by about 45% to 67,000 barrels per day, and reached about 96,000 bpd between January and April of this year.
Existing US sanctions already threaten foreign firms, if they have US connections, with fines over any business with Iran. Donald Trump’s May 8 order, withdrawing the US from the July 2015 nuclear deal, expands the threat by demanding that foreign companies end all trade and investment — including with the energy and financial sectors — by November.
France’s energy Total has suspended a $4.9 billion investment in the South Pars gas field, the world’s largest. The shipping company Maersk and the German insurer Allianz are among other firms which have withdrawn since Trump’s announcement.
Earlier, this week two Indian banks asked exporters to complete their financial transactions with Iran by August in response to the planned US expansion of sanctions.
“IndusInd and UCO bank are telling exporters that you complete all Iran business by August 6,” Ajay Sahai, the director general of the Federation of Indian Exporters Organisation, said.
Supreme Leader’s Aide Sets Out Iran Response to US Withdrawal from Nuclear Deal
The Supreme Leader’s top aide, Ali Akbar Velayati, has outlined five responses to the US withdrawal from the July 2015 nuclear deal — in effect, a restarting of Iran’s enrichment of uranium to 20% and a possible “breakout” capability for military use:
*Launching of the uranium hexaflouride (UF6) process for centrifuges
*Producing & using nuclear engines for ships and submarines;
*Using carbon fiber
*Researching and developing the new generation (IR6 and IR8) of centrifuges
*Developing ballistic missile capability.
Velayati tried to reconcile the measure with talks with the remaining 5+1 Powers (UK, France, Germany, Russia, and China) and the European Union to maintain the deal: “We can produce sustainable isotopes that show our strength but are not meant for weapons.”
However, he did not mention that the European powers have called for a separate accord over Iran’s development and launch of ballistic missiles.