Iran, US could seal nuclear deal next month: Russia
Iran, the US and other world powers could reach an agreement to return to the 2015 nuclear deal by the end of next month, said Mikhail Ulyanov, Russia's envoy to the talks to revive the Joint Comprehensive Plan of Action (JCPOA).
"If the talks continue at the current pace, it is quite realistic that we reach an agreement by the end of February," Ulyanov told Rossiya 24 television in an interview in Vienna late yesterday.
But he said that it would realistically take another two months or so for the deal to fully come back into effect. "It will take time for the Americans to prepare for the lifting of sanctions and provide the necessary conditions for [foreign] businesses to return to Iran," Ulyanov said.
And "Tehran in turn will need a month or two to prepare for a full return to its previous obligations under the deal." "So, in reality, the deal could be revived no later than April," Ulyanov said, adding that it would come with a lifting of sanctions on Iran's oil.
The latest round of talks to revive the JCPOA resumed on 3 December, with all original parties to the deal — Iran, the US, France, Germany, China and Russia — working concurrently on issues relating to sanctions relief, Iran's nuclear activities and verification.
Iran began to gradually ramp up its nuclear activities to levels beyond what is permitted by the deal, known formally as the Joint Comprehensive Plan of Action (JCPOA), in the middle of 2019, one year after former US president Donald Trump formally announced he would be pulling out of the deal and reimposing sanctions on Tehran.
Discussions between Iran and the US have so far been taking place indirectly, with the EU acting as an intermediary, because Tehran refuses to meet face-to-face with US officials.
But Ulyanov said that this could soon change. "The Iranians are not ready [for direct talks]," he said. "But just the other day, Iran's foreign minister said that if the talks reach a point when there is a need for dialogue with the US for the sake of a good deal, Iran will not dismiss such an opportunity. This is a signal that direct talks could take place soon."
Ulyanov said the US has had "a strong desire" to meet with the Iranian delegation directly because it feels that this could "speed the talks up."
The US sanctions that were reimposed on Iran in the second half of 2018 at one point pushed Iran's crude exports to well below 500,000 b/d from close to 2.4mn b/d previously, although shipments have picked up a little since US president Joe Biden's election in November.
Argus put Iranian crude exports at around 728,500 b/d in December, down around 40,000 b/d month-on-month. So a restoration of the nuclear deal in its original form could realistically add up to 1.6mn b/d of Iranian crude to global supply within six to nine months.
Related news posts
US majors widen output gap over European rivals
US majors widen output gap over European rivals
New York, 6 May (Argus) — ExxonMobil and Chevron are seeing investments in Guyana and the Permian shale basin pay off, widening a gap with their transatlantic counterparts that could get even bigger with the completion of recent mega-deals. ExxonMobil is championing a speedy ramp-up of a massive offshore oil discovery in Guyana, where production has surged to more than 600,000 b/d of oil equivalent (boe/d) in the space of just a few years. And Chevron recorded a 35pc jump in first-quarter US output from a year earlier, buoyed by better-than-expected performance from the Permian basin, as well as the $7.6bn acquisition of US independent PDC Energy that bolstered its footprint in Colorado's DJ basin. And after years of delays and cost overruns, its highly vaunted expansion project in Kazakhstan is finally close to seeing the light of day. Even though European rivals including Shell and BP are backtracking on previous plans to scale back their reliance on oil and gas production, the US majors are poised to extend their lead after dominating a recent round of industry consolidation. ExxonMobil will become the top producer in the Permian after wrapping up its $59bn takeover of shale giant Pioneer Natural Resources. Anti-trust regulators at the US Federal Trade Commission cleared the deal after barring Pioneer's former chief executive, Scott Sheffield, from gaining a seat on the board, following allegations that he sought to collude with Opec members. And Chevron is still optimistic that its pending $53bn purchase of independent producer Hess will close by the end of the year, even though ExxonMobil has thrown a spanner in the works by claiming its right of first refusal over Hess' 30pc stake in Guyana's prolific Stabroek block, where it is the operator. Chevron's attempt to muscle in on Guyana's oil riches would answer lingering concerns over its long-term growth profile. The dispute has now been referred to international arbitration in Paris and the company hopes the transaction can be completed this year. A failure of the deal to close would not "materially" hit Chevron's near-term valuation, according to bank HSBC. "However, the strategic gap between Chevron and ExxonMobil could widen over time if the Hess deal does not happen," the bank says. Advantage Exxon Excluding the Pioneer transaction, ExxonMobil forecasts its output will grow to 4.2mn boe/d by 2027 from about 3.8mn boe/d this year. Chief executive Darren Woods has doubled down on so-called "advantaged" projects including Guyana and the Permian, which offer the most profitable and low-cost barrels that will be key drivers of revenue growth. The company's share of overall production from such assets has increased to 44pc from 28pc in recent years. Woods sees the growing cash flow from those projects as vindication of his strategy to direct "counter-cyclical" investments before and during the pandemic, which were unpopular with some investors at the time. Spending discipline remains a key priority even as new projects start up. ExxonMobil has achieved $10.1bn of cost savings from 2019 levels, and is on course to hit $15bn by 2027. And Woods says there is scope for even more savings to be found. Meanwhile, Chevron says its output from the Permian is trending better than previous guidance for a 2-4pc decline in the first half of 2024, with more wells due to come on line later this year. The company is also preparing to start up its Anchor offshore platform in the Gulf of Mexico in the middle of the year, with more projects in the region to follow. "The outlook in the US is especially strong," chief executive Mike Wirth says. Chevron is guiding for 4-7pc overall output growth this year, after pumping a record 3.1mn boe/d last year. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Mexico's long refining quest tilts in its favour
Mexico's long refining quest tilts in its favour
Mexico City, 6 May (Argus) — Mexico's six-year campaign to boost refinery output and cut its dependence on US oil imports is starting to pay off, but time will tell if it can sustain the effort. State-owned Pemex's six domestic refineries processed more than 1mn b/d of crude in March for the first time in almost eight years, boosting its gasoline and diesel output by 32pc and cutting its imports by 25pc from a year earlier. Combined with Pemex's still declining crude production, this has pulled approximately 500,000 b/d of Mexican crude exports — mostly medium and heavy sour grades — from the market compared with a 2023 peak of 1.2mn b/d in June — equivalent to the loss of about 175,000 b/d on average this year compared with 2023. The government said earlier this year that it was not planning "significant" export cuts after cancelling some term contracts. But the drop in shipments combined with the eventual start of its long-delayed 340,000 b/d Olmeca refinery, possibly in 2025, has the potential to shift global flows. At least two independent US Gulf coast refiners are sceptical of major shifts. Road fuel demand is expected to exceed capacity additions in the coming years, Marathon Petroleum chief executive Michael Hennigan said recently. Valero, which is opening a marine storage terminal in Mexico, where about 250 retail outlets carry its brand, expects demand from Mexico to remain strong and grow, chief operating officer Gary Simmons said in its latest earnings call. The impact of Mexico's shift to greater self-sufficiency will depend heavily on its ability to sustain its long-promised refinery renaissance. Mexico's crude exports have already picked up in April from March, to roughly 660,000 b/d based on ship tracking data, although still about 125,000 b/d lower than a year earlier. Energy independence Pemex's refining rates started to fall in 2014 after the previous administration chose to rely less on domestic production and focus more on opening the energy market to outside investment. President Andres Manuel Lopez Obrador vowed to make Pemex great again and build a big refinery to reach "energy independence" when he took office in late 2018. Lopez Obrador poured at least $3.7bn into maintenance alone at Pemex's ageing refineries in 2019-23, excluding major projects including uncompleted ones to add cokers at two refineries that will cost $6bn-8bn and a spiralling $16bn-20bn for the Olmeca plant. It bought out Shell's share in the Deer Park refinery in Texas , taking full control of the plant in 2022. With presidential elections set for June, it was time to show results. But Pemex has a long history of high accident rates , making refinery operations unreliable. The next administration may have to sustain some of this spending and tackle Pemex's $101.5bn debt at a time of calls for structural reform. In addition, the 330,000 b/d Salina Cruz and 315,000 b/d Tula refineries — Mexico's largest — have long struggled with elevated high-sulphur fuel oil (HSFO) production that takes up valuable storage space and makes it hard to run both plants at high rates simultaneously. Record-high exports of HSFO in March helped and Pemex is building coking units at both refineries to solve this, but they are unlikely to both start until early 2025. Attention is on whether and when the Olmeca refinery will affect Mexican demand and offer balance more permanently. Pemex said it will start producing diesel in late May, but also does not expect more than 9,000 b/d of output of all fuels this year . The refinery has missed multiple deadlines, the latest in April. Olmeca's crude unit — the first processing unit — faces "major issues", a source familiar with Pemex refinery operations says. But others say secondary processing units are ready. Pemex refinery operating rates % Domestic refineries Mar 24 Feb 24 Tula 78 80 Salina Cruz 72 40 Madero 69 60 Salamanca 62 60 Cadereyta 58 60 Minatitlan 53 50 Pemex Pemex exports, imports ’000 b/d Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Chevron’s oily DJ basin buy boosts gas output
Chevron’s oily DJ basin buy boosts gas output
New York, 3 May (Argus) — Chevron's US natural gas production has surged in recent quarters due to its crude-focused acquisition of Denver-based PDC Energy last August, increasing the oil major's exposure to the US gas market months after that market entered an extended price slump. Chevron's US gas production in the first quarter was 2.7 Bcf/d (76mn m3/d), up by 53pc from the year-earlier quarter and the highest since at least 2021, according to company production data. Chevron's total US output rose by 35pc year-over-year to 1.57 b/d of oil equivalent (boe/d), while US crude output increased by 21pc to 779,000 b/d. The acreage Chevron picked up last year in the DJ basin of northeast Colorado and southeast Wyoming has higher gas-oil ratios than the rest of its US portfolio. Chevron mostly focuses US production in the crude-rich Permian basin of west Texas and southeast New Mexico. Since Chevron closed its acquisition of PDC on 7 August, US gas prices have mostly languished in loss-making territory. Prompt-month Nymex gas settlements at the US benchmark Henry Hub from 7 August 2023 to 2 May 2024 averaged $2.46/mmBtu, down from an average of $4.999/mmBtu in the year-earlier period. In a May 2023 conference call over Chevron's acquisition of PDC, chief executive Mike Wirth expressed optimism for the long-run outlook for natural gas, despite the more immediately dim outlook. "There's going to be stronger global demand for gas growth than there will be for oil over the next decade and beyond as the world looks to decarbonize," Wirth said. Despite lower US gas prices, Chevron has captured $600mn in cost savings from the PDC acquisition between capital and operational expenditures, the company told Argus . Crude prices have also been more resilient. Chevron's profit in the first quarter was $5.5bn, down from $6.6bn in the year-earlier quarter, partly due to lower gas prices. US gas prices have been lower this year as unseasonably warm winter weather and resilient production have created an oversupplied US gas market. A government report Thursday showed US gas inventories up by 35pc from the five-year average. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Kazakhstan outlines Opec+ compensation plan
Kazakhstan outlines Opec+ compensation plan
London, 3 May (Argus) — Opec+ member Kazakhstan has submitted a plan to Opec detailing how it intends to compensate for producing above its crude production target in the first four months of the year. Kazakhstan and Iraq — which has also submitted a compensation plan — are the Opec+ alliance's largest overproducers and a key reason why the group exceeded its overall production in the first three months of the year . Kazakhstan's energy ministry said it produced above its target by 129,000 b/d in January, 128,000 b/d in February, and 131,000 b/d in March, according to secondary source estimates. Opec secondary sources, of which Argus is one, have yet to formally submit their production estimates for April, but Kazakhstan said it is factoring preliminarily overproduction of 100,000 b/d for April. The ministry said it kept oil production high because of high winter demand for natural gas — much of its gas production is associated and is produced alongside its oil. Kazakhstan said it would start its compensation plan in May with an initial cut of 18,000 b/d below its official target of 1.468mn b/d. It would then stick to its target in June and July before implementing a cut of 131,000 b/d in August, none in September, 299,000 b/d in October, 40,000 b/d in November and zero in December. The cuts have been designed to coincide with scheduled maintenance at the country's key oil fields of Kashagan and Tengiz, the ministry said. Kazakhstan would have to reduce its output by 149,000 b/d in May compared with its March production of 1.599mn b/d to meet its pledge, according to Argus calculations. The compensation plan is set to be adjusted once a final figure for April is available. The plan would be further adjusted to accommodate any change in the Opec+ alliance's output policy — for which a meeting is scheduled to take place on 1 June in Vienna. Opec has been increasing pressure on members exceeding their targets. It called last month on countries that have overproduced to submit detailed compensation plans by the end of April. The Opec+ alliance has implemented a series of cuts — voluntary or collective — worth a combined 5.4mn b/d since October 2022 in a self-described bid to "support the stability and balance of the oil market". The latest round of "voluntary" output reductions by several members came into force in January and is due to run until the end of June. By Aydin Calik and Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more