Iran Petchem Rated Capacity to Hit 100mt

Iran holds a 30% share of the Middle East’s petrochemical market and ranks second in the region, but it faces restrictions in attracting investment due to sanctions. Despite sanctions, the Iranian petrochemical sector has been growing in recent years. Iran earned over $22 billion in revenue last calendar year from this sector. Under the 14th administration, the National Petrochemical Company (NPC) has been fixated on completing the value chain and diversifying petrochemical markets. Hassan Abbaszadeh, CEO of NPC, says 18 new petrochemical projects are planned to come online in the current calendar year. He tells “Iran Petroleum” that the new projects would add 7 million tonnes (mt) to Iran’s installed petrochemical production capacity, which would bring the rated capacity to 100 mt a year.

The following is the full text of the interview Abbaszadeh gave to “Iran Petroleum”:

How much did Iran’s petrochemical industry supply last calendar year?

Iran’s petrochemical industry is among the industries with the highest contribution to value chain completion and hard currency income. About 70% of petrochemical products are exported. The installed production capacity of Iran’s petrochemical industry reached 97 mt last calendar year, which we expect to reach 100 mt by the end of spring. We predicted to produce 76 mt of petrochemicals last calendar year. We produced more than 70 mt during 11 months, which was sold on foreign markets for $11 billion and on local markets for $10 billion.

The 14th administration took office during the second half of the last calendar year. What has been done with regard to value chain completion and balanced development of the petrochemical industry in Iran?

Once the 14th administration took office, we paid special attention to these issues. We decided to manufacture about $2 billion worth of commodities required by the petrochemical industry that we had to import. Regarding value chain completion, the bulk of our products pertains to the propylene chain. During the second half of the current calendar year, Maroun Petrochemical Co. plans to establish a propylene park in Mahshahr Port. In this park, we would see the production of seven products for the value chain. As far as the balanced and sustainable development of the petrochemical industry in Iran is concerned, we have prepared spatial planning documents for each province in the downstream industry to develop the petrochemical industry in each province based on water resources available and feedstock. This document is to be assigned to a contractor to explore opportunities for investment in the downstream sector to allow for attracting investment. In the upstream sector, petrochemical companies have expressed readiness to complete their feedstock resources and contribute to developing upstream fields. We’re currently in the final phase of negotiations for its implementation. We expect construction work to begin by March 2026.

We’re now in the second year of the 7th National Economic Development Plan. How many petrochemical projects are underway? As far As capacity building is concerned, how much do you expect this industry to reach by the end of the 7th plan?

The orientation of the petrochemical industry in the 6th and 7th development plan is toward the value chain. Under the 6th plan, 100 mt production capacity had been targeted, which we failed due to sanctions-induced restrictions. Under the 7th plan, we intend to bring our production capacity to 131 mt a year. We will complete the propylene, methanol, ammonia, and aromatics chain. We’re now in the second year of the 7th plan. This year is the most important year of this plan for us, as 18 petrochemical projects will come online within the framework of the value chain. We have also considered incentives for investment opportunities like cut-price feedstock under the 7th plan. Under the 7th plan, the idea is that petrochemical holdings or companies allocate at least 40% of their margins to petrochemical chain completion. In my view, it would be a good opportunity for the prosperity of investment in the petrochemical industry under the 7th plan. The most important thing to happen under the 7th plan concerning the development of the petrochemical industry would be the beginning of the second step in the privatization of petrochemical companies. As you know, under the 1st step for privatizing petrochemical companies, only 15% of these companies were privatized with the remaining shares belonging to pension funds. Now, under the 7th plan, pension funds should be liberated from petrochemical management. We expect the privatization of petrochemical shares to significantly affect the growth and development of this industry in the coming years.

How many projects are underway in the petrochemical industry?

There are currently 50 petrochemical projects under way, worth $24 billion. Of this figure, $12 billion would be absorbed under the 7th plan from equity shares, NPC, and international finances. We plan to implement 50 petrochemical plants under the 8th plan. Arrangements have already begun for some of them. To regularize the implementation of petrochemical plants, we plan to screen those set for the 7th plan. On this basis, we will revise the projects that failed to come online last calendar year as initially planned. We will see whether to cancel projects that investors are not interested in or reconsider permits.

What measures have you considered to attract as much investment as possible in this sector?

As mentioned before, $12 billion has thus far been invested in the projects supposed to come online under the 7th plan. To absorb the remaining $12 billion, we will use other methods like foreign finance, domestic resources, and petrochemical dividends. Iran’s petrochemical industry sold about $23 billion in the calendar year to March 2024. Therefore, if petrochemical shareholders invest even 20% of their dividends in development projects we will be able to absorb part of the resources envisaged for 7th plan projects. Another plan for attracting investment has been to establish an investment fund whose contributors would be petrochemical holdings, people, and banks.

Do you have any plans

under review for diversifying export markets to reduce export risk?

In the petrochemical industry, our international interactions are important from various aspects: market, market development and technology procurement. As far as markets are concerned, in a bid to reduce dependence on our export markets, we have a plan underway in collaboration with the Ministry of Foreign Affairs to focus on African, Indian, and South American markets. The framework of this plan has been adopted and effective steps will be taken in this regard in the current calendar year. In this partnership, petrochemical companies are with us to supply Iranian-made petrochemicals to new markets. Regarding technology, we need international cooperation in processing knowledge. But as far as the technical know-how for catalysts is concerned, with proper investment made in recent years, the bulk of our catalysts is sourced domestically. Since one and half years ago, we have even been exporting our catalysts to northern neighbors including Russia. Regarding equipment manufacturing, under the aegis of the Ministry of Petroleum, local manufacturing companies supply a significant portion of our necessary equipment. Some key items are still being imported. Thanks to our good communications with foreign manufacturers in this regard, they will provide us with equipment which we can’t produce domestically. On financing projects, we have had fruitful talks with foreign companies about sales or advanced sales of some of our products to supply a portion of our required investment through financing.

What have you done to break into the market of countries like India?

As mentioned, we have started cooperation with the Ministry of Foreign Affairs in this regard. Previously, more than 17% of the Indian market was in the hands of the Iranian petrochemical industry, but now this amount has decreased; we are seeking to regain our position in the Indian market. We have also taken good steps in the African market. Given the vastness of this market and its diversity, we expect to gain a proper share of the petrochemical trade in the African region.

Iran shares land and sea borders with 15 neighboring countries, with a population of about 600 million. These are potential markets for Iranian petrochemical products. What measures have you taken to increase your presence in these countries?

We have traditional markets in some neighboring countries, including Turkey. For example, most of Iran’s polymers are exported to this market; the polymer market in Turkey is a growing and developing market; Iran’s northern neighbors are also traditionally present in the CIS region, and this market is also developing; we have tried to provide the basis for Iran’s development and presence here by encouraging petrochemical companies to participate in international exhibitions held in these countries. Iran’s petrochemical market in Russia is also developing; even several large Russian petrochemical companies have requested cooperation with Iran to create a joint market in their country. We have also started comprehensive studies to actively participate in the markets of Afghanistan and Pakistan and have held meetings in this regard; although these countries are not large markets for our products, they can be developed.

What capacity is targeted in petrochemical production in the current calendar year?

Our efforts will be mainly fixated on launching 18 petrochemical projects with a $5 billion investment, which would add 7 mt to Iran’s petrochemical production capacity. We also intend to focus on market development. By the end of the current calendar year, we expect our domestic and foreign petrochemical sales to reach $27 billion, broken down to $15 billion in exports and $12 billion in domestic sales.

Under the Trump administration, sanctions against Iran’s oil industry have been tightened; to what extent will this affect the sales and exports of Iranian petrochemical products?

Due to the diversity of petrochemical products compared to crude oil, sanctions on Iran’s petrochemical industry are somewhat more difficult. On the other hand, Iranian petrochemical companies have focused on diversifying their product sales in recent years and have achieved success in this regard; the number of companies active in the petrochemical industry is large and their sales diversity is also high. Therefore, they have more freedom of action in marketing and selling their products than in the oil sector. For this reason, sanctions on petrochemical products are somewhat more severe than on oil sales. Of course, NPC is monitoring the market as sanctions intensify and, by forming committees, is providing the required solutions to mitigate the effects of sanctions.

What’s the Iranian share of global petrochemical trading?

Iran’s share of global petrochemical trading is 3%. Iran’s regional share stands at 30%, just next to Saudi Arabia. We are in a region where other countries also have gas resources and are developing their petrochemical industries, so undoubtedly competition in this region is close. On the other hand, we must also pay attention to the fact that we are competing with these countries in a situation where they are not under sanctions and have easy access to advanced technologies and international markets. However, we are also present in this market despite all the restrictions that sanctions have created for Iran, and Iranian manufacturers have reached good achievements in many sectors. Under the 14th administration, we have taken measures to develop our petrochemical industry and market petrochemicals realistically. We hope that we will be able to expand our activities through international interactions the government has undertaken. Despite sanctions, we have made plans to make good achievements in supplying basic petrochemical products. Our production is not still high in terms of weight, but our products are key to value chain completion. I think that if we focus on completing the petrochemical value chain and developing our products, we will be able to play an active role in global petrochemical trading.

Iran Joint Oil & Gas Fields Decided

Iran shares at least 28 oil and gas fields with neighboring countries. They include 18 oil fields, 4 gas fields, and 6 oil/gas fields. Rarely is there a country in the world with so many joint reservoirs. Iran shares 12 fields with Iraq, 7 with the United Arab Emirates, 2 with Qatar, 2 with Oman, 1 with Kuwait, and 1 with Turkmenistan. Based on the latest projections, the bulk of these fields are in the phase of development and production. One of Iran’s petroleum industry policies has been to focus on developing jointly-owned oil and gas fields and making necessary arrangements to enhance recovery from them. Currently, all joint oil and gas fields have been decided upon.

Iran-Iraq Joint Fields

All but one of the 12 fields shared by Iran and Iraq have been developed and are operational. The Naftshahr field, known in Iraq as the Khanah oil field, is still under development. The Dehloran field, known in Iraq as Abu Ghirab, is operational. Talks are underway by the Iranian Central Oil Fields Company (ICOFC) with Sarvak Azar and MAPNA for the second-phase development of this field under EPCF/EPDC and IPC agreements. Aban and West Paydar are also shared by Iran and Iraq. National Iranian Oil Company (NIOC) has signed agreements with Iranian contractor Dana Energy for their development, partnering with foreign firms.

The Changuleh and Azar, which Iraq names Badra, are being developed as long as they supply oil. The first phase of the Azar field was awarded to Sarvak Azar under a buyback deal, which resulted in 65,000 b/d output. The second phase of development of the field was awarded to the same company under a $1.36 billion deal in March 2024 for the accumulated crude oil output of 177 million barrels from 18 wells. The agreement for the Changuleh field development was signed with OIEC last June for 60,000 b/d output with a direct investment of $1.2 billion.

The Sohrab oil field, or Huwaizain Iraq, is in the phase of early production. Development of this field is underway following an agreement with Dana Energy for a$897 million direct investment for 30,000 b/d output. Early production from this field started in March 2024 with 1,500 b/d output.

The Azadegan oil field is divided into a northern and a southern section. Azadegan along with the Yaran field is known as Majnoun in Iraq. Azadegan and Yaran are under development while already supplying oil. The second phase of development of Yaran has been awarded to Persia Oil and Gas Industry Development Company (POGIDC) to operate it with a $218 million direct investment for an accumulated output of 39.5 million barrels over 10 years. The output ceiling for this project has been set at 33,000 b/d.

The Yadavaran field, or Fiha in Iraq, started supplying 85,000 b/d following its first phase of development. For the second phase of development, an agreement has been signed for the drilling of 24 wells with a $567 million investment for an output of 152,000 b/d.

The Arvand oil field, which Iran and Iraq share, is under development. NIOC awarded a contract to Kayson to drill one new appraisal well and work over another one.

Iran-Saudi Fields

Iran and Saudi Arabia share three oil fields, one of which is also shared with Kuwait. The field owned by the trio is Arash in Iran and Dura in Saudi Arabia and Kuwait. The investment needed for developing Arash for 10,000 b/d output amounts to $500 million. The Esfandiar field, known as Lulu in Saudi Arabia, is under development. NIOC plans to produce 5,000 b/d of oil plus 4 mcm/d of gas from this field following first-phase early production. To reach 12,000 b/d production, $600 million in investment is needed.

Iran’s Forouzan, or Saudi’s Marjan, is under development. Enhanced recovery from this field to reach another 12,000 b/d of oil is underway with a €281 million investment.

Iran-Qatar Fields

Iran’s South Pars Oil Layer (SPOL), or Al Shaheen in Qatar, and Iran’s Reshadat, known as Al Khalij in Qatar, constitute the two oil fields shared by Iran and Qatar. Iran is developing its sections in both fields. SPOL outputisset to reach 87 million barrels of accumulated oil under a $497 million agreement.

Iran-UAE, Iran-Oman Fields

Iran’s Salman oil field;Abu Al Bukhoosh in the UAE, and Iran’s Nosrat field, or Fateh in the UAE, are shared by the two countries. Debottlenecking the Salman field is underwayto enhance recovery from its oil platform. Development of Nosrat has also ended and the field is operational. The bulk of oil from this field has been recovered.

The only field Iran and Oman share is Hengam, which the Omanis know as Bukha. Iran is extracting oil from its section. Over recent years, significant volumes of oil have been recovered from it.

Joint Gas Fields

Iran shares eight gas fields with Saudi Arabia, Kuwait, Qatar, the UAE, and Turkmenistan.

An MOU has been signed for developing the Arash field, shared by Saudi Arabia and Kuwait. The Farzad-B field, or Arabia in Saudi Arabia, is under development. It is being developed by Petropars under a $1.78 billion buyback agreement for the production of 28 mcm/d of sour gas and 5,000 b/d of condensate. Constructing a jacket, two offshore platforms, and drilling eight wells as well as installing an onshore gas pipeline are envisaged in this project. Iran’s Farzad-A, or Saudi’s Hasbah, is under development. Due to Saudi production from these fields, gas is migrating towards Saudi Arabia. Once development on the Iranian side has been done, gas migration would be cut significantly.

The South Pars gas field, known as North Dome in Qatar, is operational. Iran is recovering 715 mcm/d of gas from this field. As development projects in South Pars are over, and output loss is expected in coming years, NIOC has signed agreements with local contractors for gas compression in the massive offshore reservoir.

The Belal gas field is being developed on the Iranian side by Petropars for 14.2 mcm/d of raw gas and 15,000 b/d of condensate for a $530 million investment. It is expected to start gas supply in 2028. The Reshadat field is under study in Iran.

The Salman field is under development. An agreement for building a new pipeline from the Salman platform to Siri Island has been signed for €200 million. Iran’s Gonbadli, or Dauletabad in Turkmenistan, is in the phase of production. Development of the field is over and is producing gas now. Some on-surface activities by the National Iranian Gas Company (NIGC) would improve production in this field.

Renewables Growing Share of World Energy Mix

Pouneh Torabi

Renewable energies have seen their share of the global energy mix growing due to the exhaustible nature of fossil fuels and GHG emissions on the one hand, and their positive impact on climate changes, energy independence, economic opportunities, environmental advantages, and access to energy and equality on the other. Moving towards the development of these sources of energy has turned into a vital issue. The head of the International Energy Agency (IEA) has announced that the era of fossil fuels is coming to an end in the current decade. Iran has stepped into this path in parallel with the entire world. President Masoud Pezeshkian recently said Iran would have no option but to exploit renewables.

Why Are Renewables Vital?

Fossil fuels have traditionally made the highest contribution to energy supply. Unbridled and daily growing use of fossil energy carriers like oil, gas, and coal draw the attention of world nations to the exhaustibility of fossil fuels and environmental pollution. That explains why countries are moving towards renewables and a fundamental change is expected in the global energy outlook. According to the IEA’s 2024 statistics, about $770 billion was invested in renewables-fired power plants, $450 billion in developing renewable energy transmission lines and storage, $670 billion in energy efficiency projects, $80 billion in nuclear energy development, and $30 billion in clean fuel development like biomass fuels in 2024.

In addition to the limited amount of fossil fuels in the world, one of the main reasons for the shift to renewable energy is to combat climate change. Fossil fuels produce large amounts of GHG, such as carbon dioxide, which causes global warming and climate change.However, renewable energies, unlike fossil fuels, do not emit these types of pollutants and can play an effective role in reducing GHG emissions. On the other hand, since a limited number of countries have fossil fuel reserves, the use of renewable energies, including solar and wind, can contribute to countries’ energy security and reduce dependence on energy imports or limited resources.

Many countries, especially countries like Iran that are located in dry and sunny areas or areas with strong winds, have high potential for solar and wind energy production. These resources are easily exploited and can become a sustainable solution for energy supply. Furthermore, the use of fossil fuels, due to the increase in global population, causes severe air pollution, which can cause health problems, respiratory diseases, heart conditions, and cancers.

What Countries Are Investing in Renewables?

The importance of renewable energy development has led many countries to invest heavily in solar energy projects and increase the share of renewable energy in their energy mix. Accordingly, studies indicate that currently seven countries – Albania, Bhutan, Nepal, Paraguay, Iceland, Ethiopia, and the Democratic Republic of Congo –depend 100% onrenewables in their electricity generation.

Several countries across the Middle East are also investing in large-scale solar projects, with the country’s abundant sunlight providing a large amount of clean energy. The Omani government aims to increase the share of renewable energy in its energy mix to 30% by 2030, 60 to 70% by 2040, and 100% by 2050.

In the United Arab Emirates, Dubai’s Clean Energy Strategy 2050 sets a target of 75% clean energy by 2050, and Abu Dhabi’s Vision 2030 targets 30% renewable energy generation within the next five years. In January, the government inaugurated Masdar Renewable Energy Company’s 24-hour solar power facility, which includes 5.2GW of solar capacity and 19GWh of battery storage.

Qatar Energy announced in September that it plans to build a 2GW solar power plant in Qatar, which could double the country’s solar capacity by the end of the decade. The state-owned oil company plans to build the facility in Qatar’s Dukhan region. Qatar Energy and Total Energy are set to launch their first 800MW solar power plant in 2022. Qatar Energy intends to develop two more projects in Mesaieed Industrial City (MIC) and Ras Laffan Industrial City (RLIC) with atotal capacity of 875MW. Qatar’s planned increase in solar capacity to 4GW by 2030 will meet about 30 percent of the country’s electricity generation needs.

Last year, two major Chinese solar equipment manufacturers built plants worth $3 billion in Saudi Arabia, highlighting efforts to globalize their production bases as they face margin pressures at home.

Jinko Solar Co. and TCL Zhonghuan Renewable Energy Technology Co. signed deals with the Saudi Public Investment Fund (PIF).

In addition to countries in the Middle East, countries in Asia, Europe, and the United States are also on the path to developing renewable energy. According to the European Environment Agency (EEA), renewables accounted for 23% of the European Union’s energy in 2022, up from 21.9% the year before due to increased solar energy use. In general, renewable energy sources in this region include wind energy, solar energy, hydropower, tidal power, geothermal energy, ambient heat absorbed by heat pumps, biofuels, and renewable energy obtained from waste.

Accordingly, China is the undisputed leader in solar energy, with the largest installed solar capacity in the world. In 2023, China’s solar energy capacity will exceed 400GW, more than double the capacity of the next leading country.

India has also emerged as a global leader in solar power with over 70GW of installed capacity. Japan is also a global leader in solar power with around 75GW of installed capacity. Japan continues to expand its solar infrastructure and aims to achieve carbon neutrality by 2050. South Korea, with over 20GW of installed solar capacity, is increasingly relying on solar power to reduce carbon emissions and reduce its dependence on nuclear and coal power.

The US also continues to expand its solar infrastructure, with more than 130GW of solar capacity; states such as California, Texas, and Florida are leading the way in solar adoption, and California alone accounts for a significant portion of the country’s solar capacity.

Renewables in Iran

Although Iran is not currently among the leading countries in solar energy, it is making extensive plans to develop renewable energy. Iran has tremendous potential for solar energy due to its geographical location.According to statistics published at the end of 2023, Iran has 1,150MW of renewable power plants, of which 33% are wind turbines, 56% solar panels, 9% hydropower (small-scale), and 2% other renewable sources. Meanwhile, about 13,000 small-scale solar panel units installed on the roofs of residential, office, and industrial buildings have been registered throughout the country.

Iran aims to develop renewable energies. President Pezeshkian recently said Iran would have no option but to exploit renewables. The 14th administration plans to be able to generate 30,000MW of renewable power next year. Iran’s energy minister has said the installed capacity for renewable electricity in Iran has exceeded 1,500MW, which is expected to rise to 1,800MW soon. Over five years, Iran’s installed renewable power generation would have reached 50,000MW. Iran plans to invest $5 billion in renewables.

High Demand for Renewables

Global demand for energy is expected to rise in parallel with demographic growth, industrialization, and the spread of sophisticated technologies like AI. As climate change gets worse, demand for electricity rises for both cooling and heating. That has come against the backdrop of the emergence of the middle class in many emerging economies, which would increase demand for air conditioning systems.

Global growth in several sectors and the push for decarbonization are expected to contribute to a sharp increase in demand for renewable energy in the coming decades. As demand increases, governments across the world are working to expand their renewable energy capacity to support the transition away from fossil fuels.

60,000-b/d Condensate Refinery Due Soon

The CEO of National Iranian Oil Refining and Distribution Company (NIORDC), Mohammad Sadeq Azimifar, has said that the Adish gas condensate refinery is to come online this calendar year with 60,000 b/d capacity, which would increase the national gasoline supply. Azimifar said in an interview that the first phase of the Mehr Khalij Fars petrochemical refinery would also become operational. Once fully operational, the latter would add 120,00 b/d to national refining capacity.

The following is the full text of the interview Azimifar gave to” Iran Petroleum”:

How much did national refining capacity increase during the second half of the last calendar year, i.e., once the 14th administration took office?

The Ministry of Petroleum makes plans for power plant fuel at the beginning of the year so that the level of stored fuel would reach an acceptable level when cold months strike. Last September, the power plants’ stored fuel levels were 43% down from the year before. Therefore, focusing on this issue under the 14th administration was essential. In light of production and consumption in the country, we deemed it necessary to boost our storage levels to prepare for a tough winter. We kept enhancing our storage capacity up to December. The job had been divided and NIORDC had a key responsibility as it is tasked with supplying fuel to power plants. We focused on many factors. First, we intended to increase production and storage levels and the distribution of refineries. We estimated that we would have to increase production to supply liquid fuel to power plants. As soon as the 14th administration took office, meetings were held with refining experts, and an operational plan was adopted explaining where and how we could enhance our gasoil capacity. The outcome was that we increased gasoil production from the level seen during the first five months of the year. During the first five months of last calendar year, gasoil production averaged 111 ml/d, approximately unchanged from the year before. But from December to February, our production hit 120 ml/d. Therefore, the accumulated production and storage last calendar year was up 450 ml/d year-on-year.

Along with increased production and storage comes the issue of transport. What has NIRODC done to improve the transport and distribution status?

More important than increased production was the ability to carry these products to power plants. We had to carry these products mainly from southern Iran to power plants in the north, using infrastructure like pipelines and road tankers, and a tank truck fleet. To that effect, the 460 km Bandar Abbas-Rafsanjan pipeline came on-stream for carrying petroleum products in November 2024. We have since been transporting 14-15 ml/d of products to the north. Regarding oil tankers and tank truck fleet, 3,000-4,000 new ones were added, which finally helped boost fuel transport. Besides, it was essential to increase gasoline storage in parallel with gasoil delivery to power plants to face no shortage during the Nowruz holidays. As figures from the Ministry of Energy attest, we managed to increase liquid fuel delivery to power plants by 40% under the 14th administration, or 6 billion liters more year-on-year. For the entire year, about 21 billion liters of gasoil was delivered to power plants, which is a record set by NIRODC.

Upgrading the quality of petroleum products would improve environmental conditions and boost the economy. What has been done to that effect?

Within NIORDC, we are focused on improving both quantity and quality. We are not content with increasing the volume of products. We don’t intend to sacrifice the quality of our products by increasing production. That is why ever since the 14^th administration took office, lower octane numbers have been our red production line. Given the fact that operating refining projects is time-consuming, we were looking for options to boost the quality of products at existing refineries. Regarding gasoline production, we have had a 10 ml/d output supply. The refineries’ gasoline output has increased from 97 ml/d to 107 ml/d. At the gasoline production units of refineries, we could capture more naphtha. Therefore, we carried the surplus naphtha destined for export to Isfahan, Tehran, and Tabriz refineries, which finally helped us increase the output of our refineries. At the

Bandar Abbas Gas Condensate Refinery, we applied processing modifications to achieve a 3-4 ml/d output hike. That was how we enhanced our production by 10 ml/d. Euro-4 and Euro-5 gasoil and gasoline production increased year-on-year during the second half of the last calendar year. Last November, the hydrocracking unit of the Abadan refinery became operational to supply 4 ml/d of Euro-5 gasoil. Operation of the isomerization unit of the Shiraz refinery boosted the quality of petroleum refined products of the facility to Euro-5 grade. In collaboration with the National Iranian Oil Company (NIOC), we increased feedstock delivery to refineries by 100,000 b/d, which resulted in gasoil production. That boosted output both quantitatively and qualitatively. Of course, all these achievements were due to synergy and convergence between various sectors of the petroleum industry, ranging from NIOC to refineries. 

What is NIORDC’s outlook for the current calendar year?

Given increased gasoil production and improved logistics and transport capabilities last calendar year, we are trying to race ahead. Based on the 7th National Economic Development Plan, we need to bring our gasoline and gasoil production capacity to 129 ml/d and 130 ml/d. To that effect, it is necessary to maintain output growth while completing development projects. We have also prioritized existing projects to realize the objectives set in the 7th Development Plan. We have identified 24 priority projects in the production and transport sectors, which should come online as soon as possible.

Which sectors are these projects associated with?

In the refining sector, the Adish condensate refinery is coming online in the first quarter of the current Iranian calendar year. This refinery has a 60,000 b/d capacity, which would significantly contribute to the gasoline supply. The Mehr Khalij Fars refinery is another project whose first phase we intend to bring online this calendar year. Its final capacity is 120,000 b/d. As far as quality upgrades at refineries are concerned, I have to refer to two gasoil quality improvement projects at the Shiraz and Tehran refineries that are planned to come on-stream by next March. The Shiraz refinery projects would increase gasoil output at this refinery to Euro-grade. The Tehran refinery projects would boost the quality of products supplied by the facility to Euro-4 and Euro-5 grades. Regarding development and improvement in oil product transport infrastructure, a 1,000 km pipeline worth $800 million is set to come online early this year.

How much investment is needed to increase oil and condensate refining capacity this calendar year? How do you plan to finance it?

For priority projects, the remaining CAPEX is about $8 billion, $4-5 billion of which is estimated to be earmarked for the 300,000 b/d Shahid Soleimani petrochemical refinery. A variety of options are pursued for financing. One option is to go through Article 45 of the 7th National Economic Development Plan, giving 40% of net margins to quality and downstream chain development projects. The second option is the Abadan refinery, where revenue from surplus production may be used to finance the second part of Phase 2. The third option is to dip into the project fund. We have already had talks with the National Development Fund of Iran (NDFI) to decide on the manner of allocating resources. And regarding foreign financing, I have to say that it is being followed up on separately.

Flare Gas Capture Projected to Hit 16bcm/yr

Iran’s minister of petroleum, Mohsen Paknejad, has said associated petroleum gas gathering is planned to reach 16 bcm a year.

He said that currently 4 bcm a year of flare gas is being gathered, which should increase as required by the 7th National Development Plan.

“Flare gas capturing is a key issue. High volumes of flare gas is being burned in the upstream oil sector, which would mean wasting away natural resources. In a bid to bring these projects to conclusion, some short-e and long-term plans have been formulated,” he added. 

Paknejad said 40 mcf of gas had been captured in the Rag Sefid oil field during the final months of last calendar year, adding the figured recently reached 120 mcf.

“This trend is going on until we reach the point where we would no longer see any flare gas and natural resources being wasted away,” he added.

The minister who was visiting the Tehran oil refinery, said the 250,000 b/d crude oil processing facility was instrumental in petroleum products supply across the country.

“Some refining projects have been adopted, some of which would come online in the current calendar year,” he said.

“Some of these projects pertain to petroleum products quality upgrade projects at the Tehran refinery, which are key to environmental obligations,” he added.

“Some projects are also under way to enhance the quantity of petroleum products at this refinery in order to realize the objectives set out in the 7th Development Plan. These projects are going on at a good pace and they will come online on schedule,” said the minister.

Referring to US sanctions and maximum pressure policy to squeeze Iran’s oil exports to zero, he said: “I see such allegations as pure fantasy and they will not come true.”

He said Iran’s petroleum industry started the new calendar year with enhanced oil output, adding that a seminar would be held soon to introduce opportunities for investment.

Self-Sufficiency in Shadow of Sanctions

Deputy Minister of Petroleum for Engineering, Research and Technology Omid Shakeri has said manufacturing and innovated financing instruments were two key achievements of the Ministry of Petroleum last calendar year.

“The tougher the sanctions the heavier our responsibility would be in addressing technological needs,” he said.

Referring to objectives set for the petroleum industry under the 7th National Development Plan, he said: “Last calendar year, the Ministry of Petroleum signed 24 first-time manufacturing agreement worth $100 million to address technological needs in this industry.”

He added that these agreements were indicative of Iran’s firm determination for technological self-sufficiency in the petroleum industry. “Some commodities that have been manufactured for the first time have entered the cycle of petroleum industry manufacturing and this is just the beginning of the road.”

Touching on tough sanctions imposed on Iran’s petroleum industry, Shakeri said the restrictions offered an opportunity for the growth of local capabilities.

“Although sanctions have caused numerous problems we have been driven towards self-sufficiency. We have to push ahead with petroleum industry operations without any halt. Identifying and prioritizing domestic needs and planning for manufacturing represent one of the main solutions in countering sanctions,” he said.

Shakeri said during the energy transition period, exporter nations like Iran should bring their recovery from fossil reserves to a maximum, which would require $150 billion in investment under the 7th Development Plan.

“The most important thing to do is to attract big investments based on new contract models and business diversity with a view to increasing production while exporting technical and engineering services and catalysts,” he said.

Gas Industry Development Picking Up Seed

The acting head of Iranian Gas Engineering and Development Company (IGEDC), Behnam Mirzaei, has said that local manufacturers have been pushed by sanctions to upgrade their capabilities.

Referring to projects under way by IGEDC, he said: “The main projects this company has under way include Iran Gas Trunkline-9 (IGAT-9), the second phase of the Sarajeh gas storage site and the second phase of the Shourijeh gas storage site, each of which playing a key role in gas storage.”

Mirzaei said: “IGAT-9, 400 km long, is stretching from Khorramabad to Kuhdasht in four 100-km branches. Two branches are 92% completed and the remaining two 80%. This trunkline is key to energy balance and would help reduce gas network challenges.”

“Furthermore, key projects are under way in gas compressor and pipeline sectors. One important project would be to complete the second phase of the Ilam refinery, envisaged for the current calendar year,” he said.

“In a recent meeting of the Board of Directors, implementation of a 400 km project was decided, which is part of IGAT-11 and IGAT-12. That involves 3 gas compressor stations,” he added.

Mirzaei said that IGEDC was determined to bring its projects into operation in the shortest possible time, adding it was in the process of bidding. He said IGAT-10 and the Nehbandan-Sarbisheh pipeline was two key projects that had been assigned to contractors.

“In a bid to accelerate the operation of these projects, the process of choosing contractor and licensing round has been expedited. Gas compressor stations also depend on pipeline projects. Locating and arranging these stations are carried out based on the hydraulic calculations of National Iranian Gas Company (NIGC),” he said. “These are also projects for fuel conservation. One of them concerns the basic design of gas compressor station optimization using ORC and SRC methods, as required by NIGC.”

“In light of future sanctions, it was decided that necessary compressors be manufactured locally. That has strengthened the capabilities of local manufacturers like MAPNA and Oil Turbocompressor Company (OTC) while upgrading the quality and capacity of turbocompressors,” he said.

Abadan Refinery Gasoline Output Up 3 ml/d

The Abadan oil refinery has increased its gasoline production by 3 ml/d under the 14th administration, the head of the facility has said.

Fardin Rashedi said the refinery supplied about 17% of national gasoline needs, 22% of national gasoil needs and 42% of national fuel oil needs.

Referring to increased gasoline supply last calendar year, he said: “From the beginning of last calendar year up to the end of the term in office of the 13th administration, gasoline production at the Abadan refinery was 14.9 ml/d, but it reached 17.8 ml/d as the 14th administration took office. This 20% gasoline output growth in recent months was the result of increased crude oil refining capacity, using octane-increasing substances and launching the alkylation gasoline production unit.”

Regarding key measures undertaken last calendar year, he said: “The hydrogen unit with 6 tonnes per day production, the hydrocracking unit with 3 ml/d of Euro-4 gasoil production, commissioning of the sulfur production unit, startup of gasoline and gasoil pumping facilities for maximum transfer of products to the Ahvaz storage facility, initial launch of the LPG units of the second phase for propane and butane production, launching the 7th jetty of the Abadan refinery for LPG exports and increasing the refinery’s capacity to more than 500,000 b/d to compensate for fuel imbalance in the country were among important measures last calendar year.”

Rashedi said bringing the refinery’s capacity to more than 530,000 b/d, taking steps to launch the second section of the second phase and commissioning the FGRU (flare gas recovery) project are among the main plans for the current calendar year.

“The newly launched units in the first section of the second phase have been built based on the latest technologies in similar units in terms of energy consumption. The second section of the second phase would also use new technologies. Once all units of the second phase are launched, gasoline, gasoil and kerosene would be up to Euro-4 and Euro-5 standards with the gasoline output increasing about 10 ml/d,” he said.

Rashedi said LPG, motor gasoline, gasoil and vacuum bottom production stood at 2.1, 17.7, 22 and 1.8 ml/d respectively, up 20%, 19%, 12% and 42% year-on-year respectively.  Special products like light and heavy naphtha were up 18% year-on-year.

Southeast Petroleum Products Delivery Up 14%

The director of the southeastern branch of Iranian Oil Pipelines and Telecommunications Company (IOPTC), Mostafa Alizadeh-Barahin, has said that more than 22 billion liters of petroleum products was transported last calendar year, up 14% from the preceding year.

“Safe and sustainable transfer of petroleum products from production points (Bandar Abbas oil and gas condensate refineries) to consumers (Kerman, Yazd, parts of Isfahan and Tehran provinces) has been done. It reached 22.081 billion liters, up from 19.2 bl a year before,” he said.

Alizadeh-Barahin said more power plants had been connected to the fuel transport pipeline network. “Two power plants in Yazd Province (Yazd and Shirkuh mixed cycle power plants), and the Baghin mixed cycle power plant in Kerman Province were fed by IOPTC’s southeastern branch. Last calendar year, the Sarv Chadormalou power plant was connected to this network.”

He said that 825.539 ml of gasoil was delivered to these power plants to keep their running for sustainable power supply that was up 7% year-on-year.

Fuel supply to southeast is carried out through the Bandar Abbas-Rafsanjan, Rafsanjan-Kerman, Rafsanjan-Yazd and Naein-Kashan-Rey routes. It covers more than 1,500 km in Kerman, Yazd, Isfahan and Tehran and indirectly Sistan and Baluchestan Province.

Iran Largest CTEP Commissioned

The CEO of Petroleum Engineering and Development Company (PEDEC), Nasrollah Zarei, said Iran’s largest central treatment and export plant (CTEP) came online tentatively to mark the anniversary of nationalization of Iran’s petroleum industry.

“The official inauguration of this project will take place in the near future after production sustainability,” he said.

Zarei heaped praise on the minister of petroleum and the head of NIOC for their contribution the realization of such big achievement.

Mohamamd Mehdi Azeman, manager of the CTEP project, said: “The largest crude oil processing unit came online for tentative commissioning on the day of nationalization of the petroleum industry. This achievement was made thanks to round-the-clock efforts by PEDEC engineers and the cooperation of Petropars Group.”

He said the pilot commissioning of the plant had been focused on key segments including flares, auxiliary installations, desalting equipment, oil storage and oil transport installations in order to obtain assurance about the safety of operation and test line pipe pressure.

This project is instrumental in increasing crude oil production and processing capacity. It is one of the main achievements of Iranian petroleum industry in recent years. Once fully operational, it would significantly increase crude oil production and processing capacity to clear the way for further development of Iran’s petroleum industry.

 

Massive Seismic Testing Ended

The largest 2D and 3D amphibious seismic testing using wireless technology has ended in Khuzestan Province, NIOC’s director of exploration said.

Mohioddin Jafari said: “The Paniz seismic project, which is the largest amphibious seismic testing project has been carried out on 400 sq km (2D) and 2,220 sq km (3D) in Khuzestan Province.”

“In this project, wireless technology was used for the first time for 3D seismic data gathering, saving on exploration time and costs,” he added.

Jafari said the complicated conditions of this project had prevented the project from going ahead, adding that the project finally proved successful under the aegis of cooperation between the contractor and other companies involved in seismic testing.

“The gleaned data undergoes final processing and we hope that this project would clear the way for introducing new exploration objectives and generating value for the country,” he added.

Furthermore, he said, the Arvand seismic testing project has begun on 1,700 sq km of land, using wireless geophones with a view to completing 3D data about the region and studying reservoir formations in the Bangestan and Khami layers.

“This project is one of the last pieces of 3D seismic puzzle in southwestern Abadan Plain, whose construction phase has begun,” said Jafari.

In parallel with these projects, NIOC’s Directorate of Exploration has implemented modern seismic data gathering technologies using the wireless NODAL recording system in a bid to make maximum production while minimizing time and costs, he said.

Jafari said the Iranian contractor, Kish Petroleum Engineering Services Company (KPESC) has partnered a foreign company to make necessary arrangements for data gathering in the Arvand project.

He said that offshore exploration in Iran had come to a halt in 2019 due to drilling rig restrictions, adding: “Under the aegis of support on the part of the Ministry of Petroleum and NIOC and in cooperation with Iranian Offshore Oil Company (IOOC), we managed to hold a tender bid under the 14th administration and choose a contractor with offshore drilling rig.”

“By holding this tender bid, we managed for the first time in five years to sign an agreement for offshore exploration. We hope to embark on offshore exploration along border areas this calendar year,” said Jafari.

Petchem Output Capacity to Grow 9mt

The director of production control at National Petrochemical Company (NPC), Saeed Baghbani, has said Iran’s petrochemical production capacity would increase 9 million tonnes (mt) in the current calendar year.

He said that Iran is set to earn $23.6 billion from petrochemical production in the current calendar year.

Noting that Iran’s rated petrochemical production capacity increased 2 mt last calendar year, he said: “In the current calendar year, the upward trend of production capacity is continuing as some new projects become operational. Petrochemical production stood at 74.9 m last calendar year when the nominal capacity was 96 mt.”

Baghbani said that the Mahabad, Miandoab, Lorestan, Nouri, Bu Ali Sina, Arya Sasol, Ghadir and Takht-e Jamshid Pars petrochemical projects had produced more than their rated capacity.

He stressed the significance of the petrochemical industry in national economy and industry, adding that the petrochemical sector was a supplier to other industries.

“Seventeen new projects are planned to become operational in the current calendar year, further diversifying the petrochemical mix,” he added.

He said NPC’s Directorate of Production Control was seeking to enhance efficiency, boost productivity and accelerate growth, adding: “Removing obstacles to production, guaranteeing sustainability of production, sourcing feedstock, managing feedstock, optimizing technological processes and cooperation and convergence between petrochemical holdings and companies are aimed at sustainable production.”

Petroleum Ministry Committed to Boosting Iran Standing

The Iranian Ministry of Petroleum has offered a significant performance on the international stage with a view to bolstering energy diplomacy and bolstering Iran’s standing in global energy markets.

The ministry’s performance with regard to international energy bodies indicates its commitment to bolstering energy diplomacy and safeguarding national interests.

Over the past one year, the ministry has made key achievements with regards to the Organization of the Petroleum Exporting Countries (OPEC), Gas Exporting Countries Forum (GECF) and International Energy Forum (IEF). During the December 2024 ministerial meeting of OPEC, Iran was chosen to chair the 2025 OPEC Conference. That along with sensitive conditions prevailing over global oil markets and forthcoming OPEC seminar has offered a valuable opportunity for Iranian energy diplomacy development. Experts maintain that it can bolster Iran’s clout with major decisionmakings in the oil market.

The upcoming OPEC seminar in July will enable Iran to play its role with regard to creating convergence among OPEC and non-OPEC producers in making key decisions.

A turning point in the Ministry of Petroleum’s performance last calendar year was its successful hosting of the 26th ministerial meeting of the GECF. Hosting the even against the backdrop of sensitive regional conditions was a major political achievement for Iran’s stability and security at the international level. The closing statement of the forum, which yielded the collective view of participants, reflected the political and geopolitical position of Iran. The statement expressed deep concern about the intensification of geopolitical tensions in the Middle East and deliberate attacks against Iran, laying emphasis on solidarity with Middle East people and condoling with victims of violence in the region.

Iran also managed to block modifications to the GECF’s Constitution to lengthen the term in office of the Secretary-General. That indicated Iran’s diplomatic influence in this body.

The forum also discussed gas industry challenges and opportunities, including supply security, environmental sustainability and technological cooperation, which cleared the way for Iran to boost its standing as a large holder of gas reserves in the world.

Despite unjust US sanctions, Iran has been regularly attending the IEF’s twice-yearly meetings that are attended by ministers from 72 producers, consumers and transiters of energy to determine general energy policy for the entire world. Iran has made clear its position in favor of national interests.

The Ministry of Petroleum’s performance with regard to international energy fora indicates its commitment to boosting energy diplomacy and defending national interests. The achievements enumerated hereabove all indicate Iran’s success in stabilizing its standing in global energy markets. Not only are these achievements important economically, but they are also politically and geopolitically significant and promise a bright future for the oil and gas industry at the international level.

IGTC Sets Winter Gas Supply Record

CEO of Iranian Gas Transmission Company (IGTC) Peyman Khazraei said last winter was an exceptional period for the company.

Reiterating the significance of collective work and strategic decision-making to go through crises, he said: “Last calendar year was special and unique for IGTC. Two cold spells caused a sharp decline; the first one hit in January when temperatures fell in 26 provinces in northeast, northwest and even central Iran experienced temperature fall and the second one struck in February that caused tough conditions for gas supply.”

“However, thanks to a joint understanding and synergy at the national level, we made significant achievements last calendar year and no gas cut occurred,” he said.

Khazraei said a key achievement pertained to records set in gas transmission, adding that gas supply hit 880 mcm/d during the cold months. He added that unexpected halts at compressor stations and transmission lines were reduced to a minimum. In terms of operation, the commissioning of the Nehbandan-Sarbisheh pipeline and its connection o the northeastern network further stabilized gas supply to North Khorasan, South Khorasan and Khorasan Razavi provinces with no unwanted pressure fall in the east.

Gas transmission increase by 1.86%, i.e. 4.7 bcm, last calendar year year-on-year was indicative of more success in increasing natural gas production and transmission.

According to Khazraei, 255 km was added to transmission pipelines to bring the total to 40,222 km with 95 compressor stations. Furthermore, 10 turbocompressors were added to new compressor stations, bringing the total to 350. Such modifications and upgrades resulted in numerous records in gas transmission to allow for a more optimal gas transmission.

Regarding plans envisaged for the current calendar year, the IGTC chief said: “The first part of these plans includes development of infrastructure and upgrading maintenance systems. In the operational sector, IGAT-1, IGAT-3, IGAT-4 and IGAT-8 overhaul and some secondary pipelines were considered. About 60 km of pipeline coating has to be replaced.”

“In addition, IGTC’s plans include expansion of an intelligent network and operating 780 km of new pipelines for gas transmission stability in the current calendar year. As far as equipment is concerned, overhaul of 98 turbocompressors, electromotors and gas engines are on the agenda. Two new gas compressor stations, Dehshir-8 and Ardestan-8, are to come online to have significant impacts on gas transmission capacity. The Sarajeh gas storage facility is to be developed in Qom. Another objective is to reduce uncalculated gas volumes to be followed by the optimization of processes and reduction of costs. In a bid to boost output, modern techniques based on digital technologies and AI would be used.”

ICOFC Eyes 16 Gas Fields Development

CEO of Iranian Central Oil Fields Company (ICOFC) Peyman Imani has said technical talks for the development of 16 gas fields and launching key projects are on the agenda in the current calendar year.

He also touched on projects that have come online recently, saying: “The most important projects that have become operational include a well in Tang-e Bijar for gas supply to western Iran and the Ilam refinery, a well I Dalan, a well in Khangiran with 1.5 mcm/d capacity that became operational in the midst of cold spell, a well in Aghar and development of the Dey field with 2.4 mcm/d output and the Varavi gas compressor station with 2.5-3 mcm/d gas output hike.”

Imani said development projects are financed by the private sector that funnels its investment via local companies cleared by National Iranian Oil Company (NIOC) under IPC or EPCF deals.

“EPCF projects are under way in western Iran and the Parsian zone and the Varavi station came online based on such framework. We have also agreements with the Dehloran petrochemical refinery to feed the NGL 3100 facility. The Dehloran gas compressor station, which is 85% completed, is to come online in the current calendar year,” he said.

He also said the second phase development of the Dehloran field involving drilling eight new wells, establishment of a crude oil gathering and separation center and development of infrastructure would be on the agenda, noting: “By operating this project, crude oil and natural gas feedstock for NGL 3100 would increase.”

Imani said another project would be to develop the Tous gas field, 40 km from the Khangiran operational zone. “So far, two wells have been drilled while a third well is being drilled. A fourth one is also planned. The purpose of this project is to produce 3 mcm/d of gas to help increase gas supply to northeast. It is set to come online next winter with an initial 2 mcm/d output which would gradually increase to 3 mcm/d. However, the final objective is to increase its capacity to 5 mcm/d, for which we have started activities to bring it into operation next calendar year.”

Effective contractual talks are under way for the development of the Eram, Pazanan, Gardan, Phase 2 of Khar Tang, Sefid Zakhour, Sefid Baghoun, Halegan and Phase 2 of Aghar.

“Some 16 gas fields are to be developed by ICOFC. Technical and economic talks are under way with investors and some of them have been finalized and submitted to the NIOC Board of Directors,” said Imani. “Regarding preservation of production, we aim for building the Shanol gas compressor station. Talks have been finalized and its engineering package and EPCF contractor choosing is in the final phase. This project is set to compensate for pressure fall-off in the Shanol field and supplying the needs of downstream refineries.”

He said two more projects were also under way, which are set to come online in the first half of the current calendar year.

“Establishment of the Tabnak separation center in the Tabnak gas field with 35-36 mcm/d output and gas compressor station at the Homa field in the Parsian zone are under way. That would bring output to 13-14 mcm/d from the current 9-10 mcm/d to guarantee output stability,” said Imani.

Energy Economics and Energy Security

Fereydoun Barkeshli

Energy Market Analyst

Energy economics is a critical field that examines the way energy resources are produced, processed, distributed, and consumed, and of course, its implications for global markets, national security of countries, and environmental sustainability. Understanding the interplay between energy economics and energy security, availability has always been important, however, as we move forward, the interplay between different forces driving the markets becomes more intriguing and perplexing. This is particularly vital when it comes to oil prices. International oil prices have historically shaped the geopolitical landscapes.

Energy Economics encompasses various aspects of energy resources. During the last half a decade, to be precise, after COVID-19, energy markets in general and oil prices, in particular, have shifted from production aspects to the financial side of the supply chain. OPEC+ has kept some five and a half million barrels of crude capacity out of the market, but oil prices have not stabilized at a desirable range. Given the diverse sources of energy in recent years and impactful moves towards a new era of energy production and consumption mix, markets seem to require more time to adjust to the existing energy environment. 

Externalities and Sustainability

Externalities related to energy production and consumption, such as carbon emissions and environmental degradation, play a significant role in shaping regulatory frameworks and market opportunities and or challenges in energy economics. Advances in technology significantly impact energy production and consumption patterns. Emerging renewable sources of energy, battery storage, and CCS will influence energy transition in the coming years. However, technological advances do not necessarily limit the sphere of new sources of energy. Advancements in technologies can well occur in traditional energy sources, including oil and gas. The current narratives suggest that technological advances are not limited to non-fossil fuels. 

I would argue that with the passage of time and the emergence of new sources of energy, older types of energy do not end and do not even diminish in volume. As the US Energy Administration suggested in a 2023 annual report, today, the world consumes more coal than in the 19th and 20th centuries. As such, there’s nothing called transition when it comes to the sphere of energy. I believe this to be a misleading externality imposed on the smooth flow of a safe and affordable supply of energy to the entire world. 

Fractured Energy Trend

We need to note that the current energy trends and oil and gas, in particular, are so fractured and overwhelmed by uncertainty that it is difficult to predict how different stakeholders will position themselves in a meaningful relationship. In the United States, the current administration calls for maximum oil production. The US produced 13.3 mb/d of oil, the highest in the US and anywhere in the world. The incumbent of the White House is boosting to reach 16 mb/d by the end of the decade. Given the fact that almost the entire of additional barrels must come from shale reserves, one should expect that the price of oil should remain stable and above $70 per barrel so that the oil companies would envisage investing in new shale ventures. 

On the other hand, President Trump has re-emphasized his willingness to lower oil prices so that the American drivers will be happy with his policies. Lower oil prices contradict his vision of higher oil production. This is particularly important when the new US president has already started to levy new tariffs on imported goods from Canada and Mexico, where some 3.4 mb/d of oil is imported. How the government can cope with the dilemma is not known yet. US voters have indicated their willingness and preference for more accessible energies and more emphatically on gasoline.

US Tariffs

The US government’s emphasis on tariffs on oil and products imports from different countries will lead to higher energy prices for final consumers. Tariffs on energy imports, as well as all other commodities, will eventually increase general consumer prices. The government intends to raise the employees’ efficiency and limit the number of Federal government personnel. The government also aims at cutting taxes. 

However, the imposition of tariffs eventually leads to the supply disruption. Investments in renewable sources of energy can also be disrupted owing to the imposition of tariffs on imported equipment and rare minerals from countries like China, Russia, Canada, and some important members of BRICS that are already on the path to defining their roles and policies away from the United States.

Tariffs will also impact specific sectors of the energy spectrum. The United States is currently producing 6.8 mb/d of oil from fracking and shale oil. Shale oil is a very light crude and cannot be refined by most of the refineries in America. It has to be blended with heavy grades of crude from countries that are produced in countries such as the Middle East and Venezuela. Tariffs on crude imports raise the refining costs in the US by a certain margin.

It is fair to say that tariff against a specific product from a specific country is virtually a sanction imposed on that country. The US administration has been working on the reintroduction of tariffs on most goods and countries. After the emergence of the WTO, tariffs were considered something of the past. When the United States begins implementing tariffs on goods and services from other countries, those countries will likely retaliate. This would mean the end of an era. The world economy will enter the trump-land. 

Evolving Energy Policies

The new stakeholders in the new US administration began their campaign with an isolationist slogan. Nonetheless, for a country the size of America and with $35 Trillion dollars of international debt, isolation is irrelevant. In a country whose currency is the world reserve money, isolation may mean a much more impactful influence. A divergent energy policy among major consumers and producers will eventually lead to a wider divide and divergence.

Eurozone’s powerful economies, that is, Germany and France and the rest of Europe for that matter, relied on cheap, abundant Russian gas pipelines for some half a century. China was the factory of Europe

and supplied parts for the EU manufacturing and machine building sector. Now, both those venues are shut down. Europe is helpless and seems to be getting ready to say goodbye to the future. 

Asia is moving fast forward with China and India in front.

International oil markets have been under several geopolitical crises since 2022. War in Ukraine, growing tensions and conflicts in the Middle East, and near-war situations in sensitive areas have had limited impacts on market behaviors. This is exacerbated by the Chinese slowdown and the signs that the Chinese engine of world demand growth is shut off almost permanently. 

US unilateral exit from the United Nations climate change treaty is an indication that the United States will evade any international pressure to abide by the COP decisions. This will embolden other countries to evade climate obligations. This is considered good news for all other oil producers. Investors need a long-term perspective to make investment decisions. On the other hand, as mentioned earlier, Trump wants prices low enough for the US economy and consumers.

Oil producers, in general, and OPEC+, in particular, are contemplating the optimum price of oil for the US both to survive investment and to avoid inflationary pressures. OPEC+ wants to test Peak-Trump price bands. Based on market sentiments and Trump, the peak price is in the range of $70 to $75 for WTI. Nevertheless, aside from sentiments, market fundamentals suggest the price band of $75-80 per barrel for Brent. 

To the best of my knowledge, many market watchers overestimate the OPEC plus 6 mb/d of excess capacity. I believe that the figure is exaggerated. OPEC alliance will probably bring up something like 3.00 to 3.7 million barrels of additional barrels to the market once they decide to change policy in April or after. Most of the so-called 6 million barrels of excess capacity are either already in the market, or it’s not there at all.

Market New Dominance

President Trump’s dominance of market headlines should not obscure the shifting tectonic venue outside the US, where outside political and economic powers are fully aligned with each other for a more powerful front. In Asia and Eurasia, regional groupings and evaluating options to counter the so-called US isolationist instance. Once the current US administration insists and virtually imposes tariffs on imported goods and services from Europe, the continent will be more at ease to move its trade and economy towards Eurasia. After the war in Ukraine and the termination of gas flow from Russia, Eurozone countries began to import LNG from the United States at around four times the price they paid for the Russian gas. In the meantime, many European companies and manufacturers moved their operations to the United States, Canada, and Mexico, where energy is abundant and cheap and political stability persisted. This is what Trump wants, with the exception that America’s first policy must be followed by Europe, too. That is avoiding Canada and Mexico or accepting tariffs.

Shifting Geopolitical Chessboard 

Washington has not yet digested the new geopolitical landscape of the world and the Middle East. Trump is going to pressure the OPEC alliance to release oil. The current global oil market owes its stability to the OPEC alliance. A market with no excess capacity would be in panic. The oil market requires surveillance with excess capacity. 

It has to be noted that the Middle East has largely been starved of necessary investments. It has been repeatedly reported that Middle Eastern countries need an additional $700-800 billion to maintain and boost capacity. Anti-fossil fuels campaign by certain political parties in Europe dis-intensified international oil and gas companies from investing in the Middle East. 

As such, the current alliance of OPEC and non-OPEC producers is not a temporary phenomenon. It’s lasting and won’t be impacted by the political climate in Washington. In the meantime, Russia cannot win back major international oil and gas companies that helped boost Russia’s oil and gas production greatly. This would mean that the countries in the South, which are the main producers and consumers of oil and gas, need to join hands to formulate regional alliances.

Global oil markets will not witness a prosperous year in 2025. Even with no political pressure from the US, the OPEC alliance has to stay away from officially abandoning the 2023 quotas arrangement. However, once the war in Ukraine ends and the US lifts the current price cap on Russian oil exports, Moscow may be tempted to export more than its current quota. It may be noted that Russia has a complicated system for calculating its production and exports of crude oil.

In case Russia is tempted to deviate from its current data reporting and quota allocation within the OPEC plus, a volume share war may erupt. Once one major group member violates the quotas, other countries with additional production capacity tend to maximize production. A market share battle is always devastating for the global oil market. This can lead to a confrontation and bring down the price to a much lower level. A market share war was experienced during the 1980s. Back then, oil prices fell below $10 per barrel and some months of the year to as low as $7 per barrel. 

Shale Prices

Under such a scenario, shale oil prices would crash, too, and the US oil production would not survive the pressure. Back in 2023, one Saudi Arabia official suggested that the International Oil Majors should join in a sort of quota arrangement to help stabilize the global oil markets. 

In conclusion, given the circumstances, it is difficult to make a market prediction for the entire 2025. However, for the first quarter of the year, the market remains cautiously bearish. When OPEC+ ministers meet on 1 April this year to decide the new quota and ceiling, they will have tough choices. Hopefully, Maximum Trump will recede, and the alliance will have a clearer picture of the world oil market and the global economy.

Historic Chance for Iran to Enter European Energy Market

Amid US President Donald Trump’s threats to squeeze Iranian oil exports down to zero while increasing tariffs for many countries, seasoned Iranian diplomat Ramin Mehmanparast says Iran is facing a historic opportunity to benefit from the ongoing tariff war between the United States and the European Union (EU). In an interview with” Iran Petroleum”, he stated that Iran can meet the EU’s commodity needs via the North-South corridor.

The following is the full text of the interview given by Mehmanparast, a former ambassador to Lithuania and former spokesman for the Foreign Affairs Ministry, to “Iran Petroleum”.

The US president has expressed his willingness for talks with Iran while keeping sanctions in place and threatening a squeeze on Iran’s oil sales. Can Iran now pin hope on cooperation with its neighbors that are generally allied with the US?

Had Donald Trump not come to power to pull the US out of the Joint Comprehensive Plan of Action (JCPOA) and had US politicians not come under pressure at the national and international levels for economic benefits from the JCPOA, the conditions would have been different, and we would have seen its full implementation. Trump’s presidency changed everything. Under the present circumstances, we cannot implement this agreement, and we should keep in mind that we can win a deal when we get the upper hand. Under the present circumstances, the Middle East and West Asia are decisive to the Americans and Europeans. Therefore, we can benefit from this situation. Our region is where key energy axes meet. It also gives access to various markets. Therefore, if we can establish stability in the region to prove our standing to regional and transregional powers, we would be able to benefit from the current conditions, including an agreement with the US. We should not necessarily be in agreement with the US on all political issues. We should seek our common interests and push ahead with our talks in the same direction.

Do you mean that we can sit together with the US at the negotiating table based on our common interests?

That’s true. One point that can lead to an Iran-US agreement and subsequently bring about sanctions relief is that both nations share interests in some sectors, which we should focus on. But, in response to your question about Trump’s maximum pressure policy, I should say that Iran would experience much tougher conditions should the US president follow up on his policies more seriously, in which case we would have to consider more serious changes so that Iran’s economy would go ahead without relying on oil. One option would be to cooperate with countries that are exempt from US sanctions or are under Western sanctions in the energy sector, including oil, gas, and petrochemical exports. That can help ease sanctions. However, the fundamental policy that should be considered is that we should look for generating value-added in the oil and gas sector rather than selling crude oil and natural gas. For that purpose, we should make some structural changes in the economic sector and remove weaknesses that bring about a budget deficit. In other words, we need to reconsider measures that make us dependent on revenue from oil, gas, and their derivatives. Like in previous administrations, the current administration should proceed with some fundamental reforms. We need to make big decisions to courageously change the trend that would be costly for the economy.

Do you mean that in parallel with our ties with other countries, we can make arrangements to reduce dependence on oil revenues?

Yes, that’s the way we should adopt. We should squeeze our budgetary shortfall to zero so that we would not face shortages in our everyday spending. Oil revenues should be spent on improving infrastructure. Therefore, oil incomes should be saved in the National Development Fund of Iran (NDFI), and we should not spend them on running costs. I believe that even under the present circumstances, where we are under pressure and sanctions from Western governments, particularly the US, and despite all the unjust behaviors of the US, we should make some changes in the economic structure of the country and organize the budget. Even under the status quo, we can do something for the future of Iran. To that end, we should direct the economic structure from being state-run to the private sector so that oil revenue would be spent on vital issues. That would also serve our children in the future. If this goal is achieved, government costs would decline while privatization would earn us higher revenues. Sooner or later, we should move in this direction. Running spending makes us dependent on our annual budget, and even if

US sanctions were not in effect, our revenue and spending do not match, although we may be able to increase oil and gas output. In other words, if we wanted to manage our running costs by enhancing oil revenue, we would not afford the costs. As far as our neighbors are concerned, I should say that we have our own needs. Some needs may be common, and some may be mutual. The common goal is that our regional neighbors have mostly massive energy reserves, and they can benefit from these sources for their development. We should cooperate in order to maintain oil and gas prices so that no neighbor suffers losses. Increased oil and gas revenue is an issue that all governments in the region would be happy with because that can help them invest in their infrastructure. In collaboration with all energy producers, we can benefit from oil and gas income. Regional countries are seeking not to sell crude oil and natural gas but instead to develop their refining and petrochemical industries. We should also try our best to benefit from the partnership of various nations for developing our refining industry and reducing crude oil sales. According to Iran’s oil and gas planning, the country would need $200 billion in investment to preserve its production capacity. That would require foreign investment.

Tariff tensions are stepping up between the EU and the US. Europe’s market remains attractive to oil and gas producers. Can Iran be actively present in Europe’s market?

As there is a global trend towards investment in renewable energies, Iran can also complete its value chain rather than crude sales to export oil and petroleum products. That should be a key principle in Iran’s planning. In the short term, it seems that EU-US tariff tensions would be an opportunity for us to reach our objectives. Generally speaking, we should be able to benefit from all opportunities. The Europeans need oil and gas. The EU used to supply its oil and gas from Russia, but the war [on Ukraine] ended it. We should therefore look at this market. As the Europeans are thinking less about oil and LNG imports from the US, they deem it more profitable to benefit from Iran’s energy market. In the meantime, due to Iran’s location in the North-South Corridor, we can also source commodities to the EU. Therefore, we should engage in dialogue with Europe within a purposeful framework and based on mutual respect. But if the Europeans want to move in line with the US’s incorrect policy of threats and sanctions, we should forsake this market.

How do you see Iran’s energy market and economic conditions now?

Donald Trump often raises foreign policy demands that are irrational. He intends to pursue his goals in this way. He takes big risks and proceeds with sudden and unpredictable changes in his plans and goals. If he goes on to toughen sanctions on Iranian oil exports, we should think of more creative and newer solutions to weaken the impact of US policies. That would make conditions more difficult for us. But for any reason whatsoever, if the Americans conclude that their method is wrong about Iran, they would modify their stance, in which case specialized talks can be held, and we would experience more acceptable conditions. That would push sanctions out of the current status, and we can repair the damage from sanctions. I insist once more that our budget structure and economic trend show that even if sanctions are lifted and oil and gas output increases, we should bring about fundamental changes in the national economy, as ongoing policies would not be useful.

Venezuela PDVSA to Cut Office Hours

Venezuelan state-run oil firm PDVSA will cut office hours for its administrative workers, an internal document seen by Reuters showed, following an energy-saving order by the government amid a worsening power crisis.

The administration of President Nicolas Maduro announced government offices would cut their hours to half as reduced generation of hydroelectricity and a lack of enough fuel to feed thermoelectric plants was leading to longer power cuts in some regions.

As part of the government’s plan, PDVSA told employees in an internal note to work from administrative offices three times a week and work from home the remaining days until further notice, aiming to reduce the company’s

 power consumption.

"We order all vice presidencies, executive divisions, and administrative offices to implement the energy saving plan in a progressive and coordinated way," the document says, adding that operational areas to produce oil and gas, refineries, and trading activities would not be affected.

The South American country, which in the last decades has faced episodes of severe fuel scarcity and power crisis, is bracing for the possibility of more severe measures by the United States following the imposition of secondary tariffs on importers of Venezuelan oil.

Asia Spot LNG Prices at 6-Month Low

 Asian spot liquefied natural gas (LNG) prices were at their lowest level in nearly six months amid muted demand in China and Japan due to high stocks after a mild winter, but are expected to get support from stronger European demand.

The average LNG price for May delivery into north-east Asia was at $13.00 per million British thermal units (mmBtu), the lowest level since Oct. 11, 2024, and down from $13.60/mmBtu last week, industry sources estimated.

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"Asian demand, most notably China, is lacking. So, we are looking at declining rates and the paper bid isn't there to support spot," said Toby Copson, chairman at Davenport Energy Partners.

"We are at a price level that will entice South Asia and India, so expect more volume to flow there until cooling demand ramps up across North Asia," he added.

Stronger domestic production, pipeline imports, renewable generation, and weak industrial demand have kept Chinese demand muted, leaving only Taiwan and South Korea as the main spot buyers over the past week, said Martin Senior, Argus head of LNG pricing.

LNG deliveries to Asia have dropped by 10% in the first quarter of 2025. Chinese LNG imports dropped to the lowest since 2022, partly due to a 15% tariff on U.S. LNG imposed by Beijing earlier this year. Yet, JKM prices have traded $4.60/mmBtu above Q1 2024 levels, said Florence Schmit, energy strategist at Rabo Bank.

Despite weaker Asian LNG demand, strong demand from Europe is expected to keep JKM prices elevated. We forecast Europe’s benchmark gas price to trade in the low 40 euros/MWh over the summer, driven by higher LNG demand for storage purposes, she added.

EU gas storage inventories were last seen 33.6% full, according to data from Gas Infrastructure Europe.

In the European gas market, prices at the Dutch TTF hub continue to be range-bound, struggling to break out of the 40-45 euros/MWh range, as uncertainty over supply availability in the summer plays against slowly declining gas demand as the weather turns milder, Schmit said.

The market showed little reaction to reports that the metering station at the Russian gas metering station in Sudzha, which is at the transit point where Russia pumped gas by pipeline across Ukraine and into Europe until the end of last year, has been largely destroyed.

S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in May on an ex-ship (DES) basis at $12.395/mmBtu on March 27, a $0.69/mmBtu discount to the May gas price at the Dutch TTF hub.

Argus assessed the price for May delivery at $12.49/mmBtu, while Spark Commodities assessed the April price at $12.359/mmBtu.

The U.S. arbitrage to north-east Asia via the Cape of Good Hope continues to incentivize U.S. cargoes to deliver to Europe, said Spark Commodities analyst Qasim Afghan.

In the LNG freight market, Atlantic rates dropped for the first time in two months to $28,250/day, while Pacific rates rose to $27,500/day, Afghan added.

GE Vernova to Supply Turbines to US Power Plant

GE Vernova has secured an order to supply its aeroderivative gas turbines for Springfield City Utilities’ (CU) new power generating station in Missouri (U.S.), the power equipment maker said.

CU's 100-megawatt (MW) McCartney Generating Station is expected to start operations in 2027. GE Vernova did not disclose the deal value or the expected delivery date of the turbines.

Energy-intensive data centers needed to scale artificial intelligence (AI) technologies are expected to push up demand for gas turbines used for large-scale power generation.

Aeroderivative gas turbines, adapted from General Electric’s aviation technology, can be used to provide about 50 MW of power in a fuel-efficient manner, as per GE Vernova’s website.

Rising electricity needs, aging power plants, and severe weather are necessitating a higher planning reserve margin (PRM).

PRM is the extra capacity needed beyond the expected demand to keep the power supply stable during times of peak usage or unexpected outages.

The three aeroderivative units are expected to inject an additional 150 MW of reliable and flexible capacity to help ensure grid stability, Vernova said.

These turbines can burn up to 100% hydrogen (H2) by volume, thereby reducing carbon emissions, the company said.

"With increasing power generation demand driven by growing electrification needs and more renewables coming online every day, operators and municipalities ... need to ensure grid reliability with high efficiency," said the CEO of GE Vernova’s Gas Power Americas region, Dave Ross.

Elliott Takes Big Short Position in Shell

U.S. activist hedge fund Elliott Management, currently campaigning for more change at BP in its capacity as a BP shareholder, has taken a big short position in Shell, according to financial filings.

Elliott’s short position, which is designed to make money if Shell’s share price falls, amounts to about 0.5% of Shell, according to data published on the website of the Financial Conduct Authority (FCA). That is the biggest short position in the company since 2016, the data showed.

Elliott took the position when Shell gave an investor update revealing further cost cuts, according to the FCA data.

Shell has a market capitalization of 169 billion pounds ($218.72 billion).

Elliott and other hedge funds typically hedge their long positions in companies with short positions in others. Elliott has also taken a 0.6% short position in BP’s rival TotalEnergies in February, according to filings to France’s financial regulator AMF.

TotalEnergies' market capitalization is 136.74 billion euros ($147.69 billion).

Elliott Management has met several large shareholders in BP to try to forge a consensus for more changes at the oil major that could include cost cuts, more disposals and a potential leadership reshuffle, shareholders have told Reuters.

BP’s share price has underperformed rivals like Shell and Exxon in the last five years, which investors have blamed in part on the company’s 2020 plan to focus on growing its renewable business while cutting oil and gas production.

Record OPEC+ Fuel Exports Blunt Crude Supply Cut

OPEC+ has exported a record amount of refined products, blunting the impact of the group’s crude output curbs, as members, including Saudi Arabia, seek to boost their revenues and market share, according to industry data and analysts.

Supply targets agreed by the OPEC+ grouping of the Organization of the Petroleum Exporting Countries and its allies, focus on unrefined crude production. 

This means individual members can increase exports of fuel products - if they have enough refinery capacity – without violating pledges to the group. 

Seaborne fuel exports from Persian Gulf OPEC+ members Iraq, Kuwait, Oman, Saudi Arabia, and the United Arab Emirates hit an all-time high in 2024 of 5.51 million barrels per day (bpd) on average, data from Kpler and OilX show, more than 7% higher than the previous year.

"A lot of countries just realize that you can make a lot more money by selling refined products ... rather than exporting crude," Kpler analyst Andon Pavlov said.  

There was no immediate comment from OPEC or relevant authorities in the five countries.    

The rise in supply of refined fuel means that the overall reduction in supply to global markets is smaller than the headline crude supply agreements indicate, reducing the impact of crude supply cuts, analysts say. 

"In other words, in equivalent crude terms, more oil is reaching the market than required," Rystad Energy analyst Mukesh Sahdev said.

The increase in supply of refined products is among the factors that have weighed on prices over the last two years due to weak demand growth from China, analysts say. Oil prices have fallen to around $70 in February, below the level many OPEC members need to balance their budgets.    

The Persian Gulf OPEC+ producers have been able to refine more after they invested billions of dollars in their downstream oil industries over the last decade.

Iraq, Kuwait, Saudi Arabia, and the UAE enhanced their domestic refining capacity to 9.1 mb/d in 2023 from 6.5 mb/d in 2009. 

OPEC forecasts additional global refining capacity growth of 6.3 mb/d by 2029, driven by the Middle East, Asia Pacific, and Africa. 

Seaborne crude exports from the five countries fell by 713,000 b/d to 14.54 mb/d in 2024 from the previous year, according to Kpler and Vortexa data. This was a result of the 2.2 mb/d output cut that the nations and three other OPEC+ members made last year. 

Taking into account the 374,000 b/d rise in oil products exports and the 713,000 b/d drop in crude exports, actual oil shipments to the market from the five countries fell by 339,000 b/d last year, according to Reuters calculations based on the Kpler and Vortexa data.

OPEC+ members are holding back 5.85 million bpd of crude output, or about 5.7% of global demand, in a series of steps agreed since late 2022. They plan to unwind a portion of the most recent layer of cuts starting in April. 

Through higher fuel exports, OPEC+ countries have been able to expand market share despite the crude cuts, analysts say.

Higher diesel exports from the Middle East to Europe to substitute Russian supplies lost to Western sanctions in 2022 hit profit margins for European refiners last year. 

This contributed to permanent refinery closures in the region. 

About 1 million bpd of refining capacity in Europe and the United States is expected to be permanently shut down this year in response to weak profits. Such closures benefit OPEC+ producers, analysts say, by giving them a bigger share of fuel markets. 

 

Kazakhstan Non-Compliance with OPEC+ Pact

 Kazakhstan contributed more than half of the overall OPEC+ oil production rise in February, lagging behind its pledges to reduce production, OPEC data showed.

Kazakhstan has persistently exceeded its output quota of 1.468 million bpd under the production-curbing deal struck by the Organization of the Petroleum Exporting Countries and allies, including Russia, together known as OPEC+.

According to the OPEC data, Kazakhstan produced 1.767 million barrels per day (bpd) of oil in February, up from 1.570 million bpd in January.

It has promised to cut the output and compensate for overproduction.

However, it is boosting oil production at the Chevron-led Tengiz oilfield, the country’s largest.

Russia’s crude oil output edged down by 0.04% to 8.973 mb/d in February from 8.977 mb/d in January, according to OPEC.

It was slightly below Russia’s output quota of 8.98 mb/d under a pact among OPEC+ producers.

Russia’s quota is expected to rise to 9.004 mb/d from April with OPEC+’s overall gradual hike in output.

Deputy Prime Minister Alexander Novak said last week that the OPEC+ group agreed to start increasing oil production from April, but could reverse the decision afterward if there are market imbalances.

Russia Pins Hope on Low Oil Price Cycle

Russia’s central bank has warned the Kremlin’s policy makers that the United States and OPEC have the capacity to flood the oil market and cause a repeat of the prolonged price collapse of the 1980s - which contributed to the downfall of the Soviet Union.

The warning came weeks before Russian and U.S. Presidents Vladimir Putin and Donald Trump began talks to end the war in Ukraine.

Trump has warned he could impose further sanctions on Russia if there is no peace deal. He also pledged higher U.S. oil production and called on OPEC’s leader, Saudi Arabia, to pump more oil to help the global economy.

The central bank delivered the warning in a presentation prepared for a discussion chaired by Prime Minister Mikhail Mishustin in February and seen by Reuters.

The central bank, which scrutinizes economic risks in classified reports at least once a year, did not say under what scenario OPEC and the United States could flood the market and how likely these risks were.

In its previous reports, seen by Reuters, the central bank did cite oil prices as one of the risks for the Russian economy, but has never been that specific on how a prolonged low oil price cycle could arise.

The economy ministry, separately, also made a presentation for the meeting, citing other risks to the economy, such as weaker investor activity, cost increases, and "bad debts".

There is no sign that OPEC is planning any change in supply policy that would lead to a sharp rise in output.

While the United States may raise oil output further, the lion's share of increases will likely come from other non-OPEC producers such as Guyana, Brazil, and Kazakhstan, where global oil majors ramp up production.

"A significant risk is the oil price," one of the slides reviewed by Reuters said, listing among risks "a significant increase in production in the United States and outside OPEC".

It also said OPEC’s spare capacity was near a record high and added it was equal to the volume of Russian crude oil exports.

"Historical precedent – after the period of high oil prices in 1974-1985, eighteen (!!!) years of low oil prices," the presentation slide said, using the three exclamation marks.

For Russia, the world’s second-largest exporter, oil and gas have been its strength and weakness since the Soviets discovered one of the world’s largest hydrocarbon basins in Western Siberia in the decades after World War Two.

For decades, high oil prices have allowed the Kremlin to cushion the economy and spend on political campaigns abroad such as support of governments from Cuba to Angola and Vietnam.

US Natural Gas Prices Steady

U.S. natural gas futures held steady as record flows to liquefied natural gas (LNG) export plants offset a decline in daily output and forecasts for lower demand than previously expected.

On its first day as the front-month, gas futures for May delivery on the New York Mercantile Exchange rose 0.1 cent to $3.93 per million British thermal units (mmBtu).

For the week, the contract was down about 1%.

Low demand should allow utilities to keep adding gas to storage in the coming weeks, with some analysts saying stockpiles were on track to increase in March for the first time since 2012 and only the second time in history.

Gas stockpiles, however, were still about 5% below normal levels for this time of year after extremely cold weather in January and February forced energy firms to pull large amounts of gas out of storage, including record amounts in January.

Mild weather and ample hydropower in the U.S. West caused spot power prices at South Path 15 (SP-15) to turn negative for the first time since June 2024. Power prices at SP-15 first fell into negative territory in 2024, averaging below zero on 18 days last year, according to data from financial firm LSEG going back to 2001.

Next-day prices at SP-15 fell to minus $5.23 per megawatt hour (MWh). That compares with an average of $28.05 so far in 2025, $31.30 in 2024, and an average of $58.87 during the prior five years (2019-2023).

At the Mid-Columbia hub in Oregon, meanwhile, next-day power prices dropped to $6.57 per MWh, their lowest since May 2023.

Financial firm LSEG said average gas output in the Lower 48 U.S. states rose to 106.0 billion cubic feet per day so far in March from a record 105.1 bcf/d in February.

Russia Ships Its Arctic Oil to Syria

Two tankers hit by U.S. sanctions are due to offload Russian Arctic Oil in Syria for the first time, days after Moscow made its first known delivery of diesel there in more than a decade, according to LSEG data, a government source, and local TV.

One of the tankers, Aquatica, with some 100,000 tons of Russian oil onboard, is set to offload in Baniyas port soon, according to a government source and pro-government Syria TV.

The vessel was reported to have arrived, but has yet to offload, according to the TV report and the government source.

The second tanker, Sakina, is still on its way to Baniyas with another 100,000 tons of oil, LSEG data showed, and was set to arrive on March 25.

Both vessels are subject to the U.S. sanctions imposed on January 10, as is the Umba storage tanker near the northern port of Murmansk, where both vessels loaded the volumes in February, according to shipping data seen by sources.

Russia has to look for alternative buyers of its Arctic oil since the U.S. sanctions in January hit producer Gazpromneft and the tankers shipping the crude.

Syria is struggling to find a replacement for Iranian oil for its refineries, as it struggles with its own oil output. Syria’s Baniyas refinery, the largest in the country, halted operations in December 2024 amid shortages following the suspension of Iranian supplies.

Russia's Gazpromneft and the Syrian oil ministry official did not respond to requests for comment.

Russia shipped a diesel cargo to Syria on board a tanker under U.S. sanctions early in March.

UAE ADNOC Pledging US Gas Investment

The international investment arm of the United Arab Emirates state oil company ADNOC will make a significant investment in U.S. natural gas starting in the coming months, ADNOC CEO Sultan Al Jaber said.

The UAE is a member of the OPEC+ producer group and one of the world’s top oil producers. ADNOC’s wholly-owned international investment arm, XRG, has about $80 billion in assets and Reuters reported last week the UAE was considering options for an XRG IPO.

"It is time to make energy great again," he told the world’s largest annual gathering of energy executives in Houston, mirroring the Make America Great Again slogan of U.S. President Donald Trump.

"Over the next few months and foreseeable future, you will see very large and significant investment by XRG in the United States," he said.

XRG would invest throughout the gas supply chain, from exploration and development through distribution, and wanted to be a one-stop shop for gas, he said.

Trump has reversed some of the energy policies of his predecessor, Joe Biden, as he overhauls the government in the early weeks of his presidency. Trump has exhorted the industry to maximize production, although under Biden, there were few checks on production, and oil and gas output hit record levels.

Trump ordered the withdrawal of the United States from the United Nations’ Paris Climate Agreement in January, removing the world’s biggest historic emitter from global efforts to fight climate change for the second time in a decade.

Jaber said it was time for a pragmatic energy policy and actions, as the world needs all forms of energy supply to meet rising demand.

Oil demand would reach 109 million barrels per day (bpd) by 2035, up from 103 million bpd now, he said. Global power demand would rise 70% to 15,000 gigawatts from 9,000 gigawatts, he said.

The race for supremacy in artificial intelligence worldwide was essentially an energy play, he said, due to the huge power demand needed for data processing.

XRG was designed to help meet the fast-growing demand of energy for AI, he added.

Jaber presided over the UN’s COP-28 climate talks in December 2023, which took place in the UAE. The appointment of an oil industry chief executive to manage talks to combat climate change was controversial. Emissions from fossil fuel use have caused global warming.

Jaber said he had wanted to inject realism and pragmatism into climate change talks when he took on that mandate.

Trump Policy Impact on the Energy Market

Shuaib Bahman

The energy outlook has seen significant changes in the United States, chiefly because of policies adopted by President Donald Trump, not least during his second term in office.  His administration has focused on enhancing domestic oil production and freeing up the energy sector, which may deeply impact oil prices and the energy market. Therefore, it is highly significant to review key policies adopted by the Trump administration and analyze their impact on oil prices and energy market trends.

Background

Donald Trump’s policies significantly impacted oil prices and the energy market during his first term in office, which materialized mainly through deregulation, boosting domestic production, and changes in international energy diplomacy. Some of his most important energy policies were as follows:

Fossil Fuel Deregulation: Trump reversed many environmental regulations including those pertaining to methane emissions, offshore drilling, and coal-fired power plants. That provided a better ground for oil and gas companies to expand their operations. His administration allowed for drilling in deferral land and water, including such areas as the Arctic National Wildlife Refuge.
National Oil Output Hike: Under Trump, the US grew into the largest oil producer in the world, mainly due to the shale oil boom. The US increased oil production and kept relatively oil prices unchanged due to a glut by American suppliers. The Trump administration’s support for the Keystone XL and Dakota Access pipelines facilitated oil and gas conveyance and bolstered production growth.

In total, enhanced oil production under the first term in office of Trump made up for supply disruptions caused by OPEC production cuts or geopolitical tensions, leading to lower oil prices. However, Trump’s foreign policy decisions like reinstating sanctions against Iran and Venezuela sent fluctuations into oil markets, which scaled back on their exports and put a strain on global supply. Trump constantly pressed the Organization of the Petroleum Exporting Countries (OPEC), in particular Saudi Arabia, to increase oil production to keep prices low. He mainly used his X account to influence market sentiments.

Furthermore, Trump has focused mainly on fossil fuels as his administration ignored the development of renewable energies. That slowed down the renewable sector’s growth.

Tariffs on solar panels, for example, have raised costs for the solar industry and hindered its expansion in the United States. In addition, Trump’s “America First” energy policy has emphasized energy independence and reduced dependence on foreign oil imports. However, the trade war with China and other countries has created uncertainty in global markets, affecting energy demand and investment.

Meanwhile, when the COVID-19 pandemic caused a historic collapse in oil demand and prices in 2020, the Trump administration’s response, including brokering the OPEC+ deal and buying the Strategic Petroleum Reserve (SPR), helped cushion the blow to US producers. Trump’s policies have had a mixed impact on oil prices and the energy market. While his administration has boosted US energy production and kept prices low, it has also contributed to market volatility and slowed the transition to renewable energy.

Future Outlook

Upon re-entering the White House a second time, Trump turned his attention to energy. In his first days in office, Trump signed several executive instructions aimed at speeding up the leasing process and issuance of permits for oil and gas projects. Accordingly, one of the key policies of Trump’s approach to energy is the repeal of regulations that restrict oil production on federal land and waters. Such a strong push for deregulation has revived oil exploration, particularly in areas that were previously restricted by the Biden administration. His administration is specifically focusing on regulations applicable to offshore and Alaskan lands to effectively boost domestic production. The deregulation has raised expectations for enhanced oil production. By facilitating faster processes for issuing drilling permits and leases, the Trump administration aims to create conditions that give oil companies the incentive to invest in and expand exploration and drilling operations.

At the same time, evidence suggests that US energy policies under Trump are aimed at enhancing production and preserving the US as the world’s largest oil producer. Naturally, increased US oil production and supply could put downward pressure on the price of black gold, especially when market conditions favor oversupply.

Although enhanced domestic oil production and supply to markets usually leads to lower prices, which benefits consumers, it may hurt producers who face shrinking profit margins. Furthermore, while enhanced U.S. production may bolster global supply, encourage competition, and possibly stabilize prices at a lower level, it may also incite geopolitical tensions, particularly about OPEC and other oil-producing countries.

On the other hand, while deregulation and enhanced production could provide cost benefits for the US, it may also raise concerns about environmental consequences. The push to reduce regulations threatens previous gains in reducing emissions, a balance that could get negative feedback from environmental groups and affect energy markets.

Mixed Consequences

Trump’s foreign policy stance will have a significant impact on energy prices. His withdrawal from various international agreements, including the Paris climate deal, signals a reduced commitment to global climate change initiatives that could change the course of energy and trade diplomacy. His approach to using sanctions, especially against countries like Iran, will also affect global oil supply forecasts. Any new sanctions could lead to more volatility in oil markets as they restrict the flow of oil and shift market conditions in favor of American producers.

In the meantime, focusing on strengthening energy alliances with countries seeking to reduce their dependence on Middle Eastern oil creates opportunities for US energy exports, and reinforces the idea of ​​energy dominance in geopolitical contexts. While limiting the influence of traditional oil powers, this prioritization could help stabilize prices at levels that benefit US interests.

That said, the impact of Trump’s policies on oil prices and the energy market is multifaceted. While the Trump administration is trying to move the United States to a position of energy dominance by promoting an agenda focused on expanding fossil fuels and reducing regulatory barriers, it will face market shifts influenced by foreign policy and balancing environmental concerns with a significant increase in domestic production due to deregulation.

Trump Tariffs Impact on Canada Energy

Shuaib Bahman

Int’l Affairs Analyst

 US President Donald Trump’s imposition of tariffs on imports from Canada, particularly on oil and gas, is indicative of a significant change in a new trade policy to bring about sophisticated economic consequences for both nations. The tariffs, which are levied like taxes on imports, can significantly impact pricing, the relationship between suppliers, and market dynamics. The present article is aimed to review the details of tariffs Trump has imposed on Canada to see its potential implications for the oil and gas drilling sector in Canada.

Facts and Figures

President Trump has imposed a 25% tariff on most commodities from Canada, while energy resources were slapped with 10% tariffs. The decision was aimed at restricting trading practices that the US Administration deemed to be unfavorable. However, they will significantly affect such key sectors as oil and gas as Canada is a key supplier to the US market.

Canada is the largest crude oil supplier to the United States, accounting for more than 60% of American oil imports, which was valued at $97 billion in 2023.

Trump’s targeted tariff approach is said to be aimed at striking a balance between US consumer interests and the local petroleum industry.

Economic Consequences

The economic consequences of Trump-imposed tariffs go beyond simple import taxes. The tariffs may deeply impact market dynamics, investment decisions, and employment levels in the oil and gas sectors. First and foremost, the tariffs are expected to increase consumer costs in the US. The projected increase in the price of gasoline and other petroleum products could be significant, as tariffs put upward pressure on crude oil prices. Experts estimate that US gasoline prices could rise by about 13 cents per gallon in regions heavily dependent on Canadian crude. For the Midwest, which is almost entirely dependent on Canadian oil, the effects would be more concrete, potentially driving up costs significantly across the world.

Moreover, Canadian producers could face tough financial pressure. It is estimated that the tariffs could cost Canadian oil producers more than $7 billion annually, due to increased operating costs associated with the impact of the tariffs on machinery and equipment needed for drilling, which are largely US-sourced. On the other hand, American consumers are forecast to experience a combined cost increase of about $22 billion due to higher prices for commodities and oil-related products.

Drilling Activities

The immediate reaction to Trump’s tariffs has been a significant drop in drilling in Canada’s oil sector. Uncertainty surrounding the tariffs has led some oil producers to reassess their capital expenditures and operating strategies.

Analysts predict that uncertainty surrounding tariffs has dampened investment decisions among Canadian oil producers, and forecasts indicate a decline in the rig count. There is a revised forecast of 175 operating rigs in 2025, down from the previously expected 185 rigs. As some producers have become more conservative in their investment decisions due to the tariff environment, this contraction in drilling activity will not only affect immediate revenue but also could have long-term effects on production capabilities and potential job losses in the industry.

As domestic employment levels in Canada’s drilling sector have not fully recovered from previous downturns linked to low oil prices and the COVID-19 pandemic, any further contraction in manufacturing activity will heighten fears of further job losses and unstable economic conditions. With smaller companies already vulnerable, the risk of further job displacement is heightened if tariffs remain in place for a prolonged period.

In addition to affecting drilling decisions, the newly imposed tariffs have increased operating costs for Canadian oil producers. The cost of critical materials for drilling operations, such as steel pipes and transportation equipment, has increased significantly as a direct consequence of the broader tariff regime imposed by the US. The tariffs could result in an annual financial impact of about C$7 billion (approximately US$5 billion) on Canadian oil producers. This financial strain threatens to erode profit margins and may necessitate difficult decisions about scaling back production or reducing the workforce.

US refineries, which are integral to Canada’s oil supply chain, may also experience increased costs associated with tariffs, which could be passed on to consumers in the form of higher fuel prices. The combination of increased costs for Canadian producers and potential price increases for US consumers complicates the broader economic environment and is likely to lead to reduced demand for Canadian crude oil over time.

Reciprocal Action

In response to the US tariffs, Canadian officials have hinted at countermeasures that could further pressure US manufacturers, including potential tariffs on US exports. Such retaliation is intended to balance the economic impact and protect Canadian interests, but could further entrench both countries in a trade conflict that undermines integrated supply chains developed over decades.

The tariff implications also include US refineries, particularly those in the Midwest, which rely on a specific blend of crude oil that includes Canadian heavy oil. The tariffs would lead to higher prices for Canadian crude oil, affecting the profitability of US refineries that are accustomed to having access to lower-cost inputs.

As refiners have adjusted their operations to process both light US fracking crude and heavy Canadian crude, tariffs disrupt these established processes. Without access to Canadian oil at competitive prices, US refiners may be forced to seek alternatives that potentially further down supply chains with higher transportation costs.

Outlook

The Trump administration’s imposition of tariffs on imports of Canadian oil and gas drilling equipment has raised significant concerns about the potential impact on Canada’s oil and gas production sector. The imposition of a 10% tariff on Canadian crude oil, alongside broader tariffs on other goods, not only highlights the changing state of the US-Canada trade relationship but also has immediate and long-term consequences for producers in Canada.

In the long term, tariffs may force Canadian producers to rethink their market strategies and dependence on US exports. Historically, more than 97% of Canadian oil exports have gone to the United States, making Canada vulnerable to changes in US trade policy.

As Canadian producers face increasing pressure from tariffs, there is a growing incentive to diversify export markets. For example, producers may explore opportunities to ship crude oil supplies to foreign markets in Europe or Asia, seeking to offset any losses in the US market caused by the imposition of tariffs.

Overall, Trump’s tariffs on imports of oil and gas drilling equipment from Canada have profound implications for the economies of both countries. While intended to protect US interests, the tariffs will result in higher prices for consumers and pressure on Canadian oil producers. With projected higher costs and an expected decline in drilling activity, both countries stand to suffer significant economic losses if the tariffs remain in place in the long term.

China to Let US Down over Iran Oil Ban

Ameneh Mousavi

US President Donald Trump has reiterated his determination to squeeze Iranian oil production to zero. But Iranian Minister of Petroleum Mohsen Paknejad has said the Americans would never see their dream come true. China is currently the main buyer of Iranian oil and is unlikely to stop buying oil from Iran. Majid Raoufi, an energy expert, tells “Iran Petroleum” that China’s 25-year cooperation pact with Iran would bar the US from reaching its objectives. He said that Cina would remain a buyer of Iranian oil and petrochemicals.

The following is the full text of the interview he gave to “Iran Petroleum”:

Iran and China have redefined their economic cooperation under a 25-year pact. Beijing has long been a buyer of Iranian oil.How will China’s Iranian oil policy change with Donald Trump in office in the United States? Will China remain a buyer of Iranian oil despite Washington’s plan to bring Iranian oil sales down to zero?

Let’s first review the existing situation. China is the most important market for Iran in crude oil and petrochemical products like methanol and various grades of polyethylene. According to Kepler, Iran supplied 1.5 mb/d of crude oil on average to China in 2024. Iran also exports 90% of its methanol to Chinese markets, which amounts to 8 million tonnesyearly. Iran’s ethylene production capacity stands at 8 mt a year, which is set to grow soon. Based on figures released by Iran’s Trade Promotion Organization (TPO), the share of various grades of polyethylene that Iran exported in 2022 exceeded $4 billion, mainly to China. In the current year, Iran’s revenue from polyethylene has dropped although it tops Iranian non-oil exports. Over recent years, we have used various methods to maintain our ties with China. We have traded oil directly with Chinese “teapot” refineries so that three oil giants, i.e. Cina National Petroleum Corporation (CNPC), Iranian Offshore Oil Company (IOOC), and Sinopec would be immune to US sanctions as Sinopec and PetroChina, two subsidiaries of CNPC, are listed on top stock markets in the world. These companies are largely active in the world and all their activities are subject to US sanctions. Therefore, they stay clear of any risky activity. But there is room for cooperation with teapots or smaller companies that do not fear US sanctions. For instance, amid Trump’s maximum pressure policy in his first term in office, Zhuhai Zhenrong remained under sanctions, but it did not stop cooperating with Iran. Separately, China has signed a 25-year agreement with Iran and cannot join the US campaign against Iran. That would not benefit its standing and prestige and it has announced it would not join the unilateral US sanctions. Therefore, all routes would remain somewhat open for buying Iranian oil so that Tehran and Beijing could preserve their cooperation and economic ties. Furthermore, Iran has also leased strategic reserves in China, part of which has been consumed. Therefore, Iran’s crude oil exports to China remain acceptable because China has not complied with anti-Iran sanctions.

Apart from the products you just mentioned, what other commodities in the oil sector are we exporting to China?

In addition to crude oil, we export LPG to China to feed its PDH plants for high-value propylene production. Propylene is known as the caviar of petrochemical products. The consulting group FGE has announced that Iran exported 11 million tonnes of LPG to China in 2023, which indicated significant progress for Iran. India and Pakistan are also buyers of Iranian LPG. In the petrochemical sector, as it was already said, the bulk of Iran’s methanol goes to China. Iran is the largest exporter of methanol to China. Of course, after the European Union slapped Russia with its 8th package of sanctions, Russian methanol and propylene were affected and about 2 mt of Russian methanol has been diverted from Europe away to go to China. Russia is exporting methanol to India too, but it mainly sends it to China. That rattles the market of this product. However, we have not faced any certain problemsconcerning selling Iranian methanol to other countries, particularly China. As far as low-density and high-density polyethylene is concerned, Iran has a good market, generating significant hard currency revenue. Therefore, we have good cooperation with China in crude oil and petrochemical products. Iran is also exporting urea. After India’s position was weakened, the main markets for Iran were Brazil, Turkey, and South Africa. These products constitute the bulk of our exports. It seems that petrochemical exports could not be sanctioned so much and that would clear the way for generating revenue in foreign currency. It is interesting to know that based on statistics released by China, crude oil imports by this country declined for the first time in 2024. Except for the year hit by the COVID-19 pandemic, we witnesseda year-on-year increase in China’s oil imports from other countries. The most important factor that kept the global crude oil market alive was China’s growing demand for crude oil. In 2023, China was importing about 11.28 mb/d of oil, which fell to 11.04 mb/d the following year. This data has influenced assessments and analyses. This trend is likely to continue in 2025.

What was the reason?

There are various reasons for this issue. First, the Chinese have apparently focused on electric vehicles as official data show at least 13 million EVs

were manufactured in 2024. Although vehicles burning fossil fuel are still numerous in the world, EV manufacturing has grown significantly in this country. The pace of capacity growth and generation of renewable power in China is stunning. In 2024, it added 277GW to its solar power generation capacity. The next factor is that various sectors of China’s economy, particularly construction, have faced recession, thereby leaving negative impacts on the country’s economic growth. An increase in China’s strategic crude oil reserves is involved.

As far as the China-Europe tariff war is concerned, do you think that we may benefit from this opportunity? Or are world nations complying with US sanctions?

In such relationships, in case tensions cross a threshold, conditions are likely to change.But I don’t think that would apply to Beijing and Washington. I mean that China-US ties are unlikely to become critical although uncertainties abound. For instance, in his New Year message, the Chinese president spoke about the integration of Taiwan into mainland China, which is a sticking point between the US and China. On the other hand, although Trump has said in his election campaign he would impose 60% tariffs on Chinese products, he finally slapped 10% tariffs. That indicates that tensions are not yet significant in their ties. Even after China’s DeepSeek was launched, the US president did not adopt any radical approach, an indication of serious rivalry between the two powers. The US president has recognized the US-China rivalry and has no intention to humiliate China. For his part, Trump also sought to link his country’s bones of contention with Mexico and Canada to China. You must know that the US has ratcheted up pressure on Mexico and Canada due to the fentanyl supply. Trump maintains that fentanyl is smuggled into the US from Canada and Mexico. He had said that drug addiction in the US due to fentanyl trafficking was backed by China. However, import and export data from China and the US indicates that they cannot simply shun their ties. I mean, these two countries cannot ignore their broad economic and trade cooperation to take risks. Data available for the first 11 months of 2024 show that China’s exports to the US exceeded $400 billion while it imported more than $130 billion from the US. When details were released in December, it became clear that Sino-American economic ties were worth $600 billion in 2024.Given that the US has a significant trade deficit with China, China is likely to increase its cooperation with the US and may even consider importing LNG and LPG from the US. Or, given that the US has increased its methanol production, it may import some of its methanol needs from the US.However, the price of methanol produced in the United States is not comparable to the price of this product in West and East Asia. For example, if a ton of methanol in Asia costs around $300, it costs more than $800 in the US.It is worth noting that Trump had stated during his election campaign that the share of US crude oil production during his presidency would exceed 13.5 million barrels, and the famous phrase “drill, baby, drill” was also based on this. Accordingly, China is likely to seek to purchase a portion of US crude oil exports so that the trade balance between the two countries reaches an acceptable level.

Which product is most likely among US exports to China?

LNG is a product that is very likely to be exported from the US to China, and the Chinese are keen to increase the share of natural gas in their mix beyond 10-11%. It is noteworthy that the competition between the two countries in the “new triad” of Chinese exports is very high and significant, which includes solar panels, electric cars, and lithium batteries.These three products were very influential in China’s GDP growth of 5.2% in 2023, contributing $1.6 trillion to Beijing’s economy. According to statistics, China’s GDP growth in 2024 was 5%, with a significant contribution from the new triad.This is the same area where the Americans and the European Union accuse China of producing in excess capacity and have imposed significant tariffs on imports of these three products from China. This issue could be one of the areas of tension between the two countries and pit Beijing and Washington against each other.

Is the US likely to not crack down on Iranian oil sales despite stating clearly its plan to work for driving Iranian oil exports to zero?

That depends on the negotiations between Iran and the US. If these negotiations do not go well, there is a high possibility that the United States will reduce the export of Iranian crude oil to China. In this case, more pressure will be put on Iran and China.They will try to prevent us from exporting our oil by seizing ships, tracking shipments, and imposing sanctions and fines on foreign ports, and they will also slow down the current import of Iranian crude oil to China. Of course, in the case of petrochemicals, it is not very possible to sanction these commodities, but in the case of crude oil, it may be accompanied by difficulties as the conditions for selling Iranian oil to China become more difficult. The dynamism of US-China relations on the one hand, and the process of confrontation between Iran and the US on the other hand are very effective in this matter.