GEOPOLITICAL IMPACT OF IRAN’S NUCLEAR PROLIFERATION ON OIL & GAS MARKET

The Oman’s relations with Iran will boost the economy of Iran by some numbers in GDP; In fact, Oman Government has played a good amount of role in The historic deal between Iran and Global powers without taking any credit in the world i.e. Actually, the historic nuclear accord between Iran and the international community unveiled in Vienna last Tuesday that will stop it from making a nuclear weapon and lift the sanctions on the country — is likely to be positive for Iran to become the middle east new power center, shifting partial US interest from Israel, Kuwait & Saudi Arabia and it is positive for Oman & India and companies here. Iran’s fiancés working capital will improve due to Gas Agreement with both Countries like Oman & India  and at the same time India's finances will improve because of a possible drop in oil prices and easier and cheaper availability of Crude Oil & Gas for India with effect on the rupee may become less volatile even as the US Federal Reserve gears up to tighten monetary policy. But on India side various Indian companies with business links to Iran, which has the world's fourth-largest oil reserve and second-largest gas reserves may get cheer up node too; In anticipation of the deal and its likely impact on crude prices the share prices of Indian public sector oil marketing companies witnessed a jump in its share prices and so far as I know, like the American Companies will make first move, and already they have prepared their mind for expansion with already existing roots of their Companies in middle east towards Iran Oil & Gas Business;

History of the deal is of 23 months old and Oman’s plan to Build Oman Iran Pipeline is almost that old in place, but since last week's State of the Union Address, President Obama threatened to veto new legislation affecting five issues sealed the deal of Iran, four of them in the domestic policy arena and just one covering foreign policy. The foreign policy issue in question involved the prospect of new sanctions legislation targeting Iran. Correspondingly, the administration has recently ramped up efforts to conclude a nuclear deal with Iran.  Should the United States and its partners in the P5+1 -- Britain, China, France, Russia, and Germany -- strike a deal with Iran, the global oil and gas markets would no doubt be affected. Indeed, several leading oil and gas companies are already preparing for a return to business in Iran in the event sanctions are lifted. Such jockeying would only intensify once the Iranian oil and gas sector became fully available to international markets. And after 23 months of negotiations Iran finally entered into a historic nuclear deal with six world powers that paves the way for ending sanctions imposed by the US and Europe and also opens business prospects for the various countries including India in Iran. This is also expected to further lift the supply of crude oil in the global market that in turn will keep the oil prices lower. But the entry of India will upset China, this deal has made China upset, and it will go closer to Russia. Chinese companies were working during the sanctions on Iran but with monopoly. It will block China’s aggression in energy market interest of Middle East. But already made investment will make the first beneficiary of profit; At the same time, India is also making a renewed pitch for rights to develop 12.8 trillion cubic feet of gas reserves that ONGC Videsh had discovered in 2008.

This deal is not uniform, it is good for America and Europe, fruitful for India and difficult for Saudi Arabia, Kuwait & Israel to digest the USA breakfast in Iran;  Fear is that - most immediately, lifted sanctions on Iran's oil and gas industry could shoot tensions with other energy producers, such as Russia, Saudi Arabia, and Qatar. It is going to make bad impact on Oil Price, Europe dependency on Russian Oil & Gas; And cheap Gas from Iran will impact Qatarisation of LNG;  The sinking oil prices will sink more, but will make a profitable monetary rain in Iran, it will be huge for them to come up from dry to flood;

But it is not easy to come up from Iran to pre sanction level of Oil Production; Just to remember, when in mid-2012, sanctions were imposed against Iran's oil exports, precipitating a drop from 2.5 million exported barrels a day to close to 1.4 million a day. If sanctions were lifted now, Iran might need a full year to bring its production to pre-sanctions levels will impact CRUDE OIL PRICE to USD $38-42/BBL but it will start impacting from the next financial year with huge drop and rain in stock exchange; Moreover, given current market conditions, only limited international investment will likely be available to help restart its production where the mjor players as buyer will be India and China. For one thing, Iran has not offered particularly attractive terms to investors, and at today's oil prices, investors are cutting back everywhere. Such realities cast major doubt on Iranian Oil Minister Bijan Zanganeh's recent claim that if sanctions were to end, "Iran will double its oil exports within two months." So, far Iran’s Oil Minister’s statement can be analysed in different sense, The minister didn’t say – it will double its production, rather the meaning is double the export, and it is due to already explored and stored and bunkered Crude Oil I Iran;

However, the announcement alone of an agreement with Iran that removes international sanctions would accelerate the current steady downward trend of the global oil price for some days or may be 150 days. Thus, the oil price would be affected even before increased physical supplies of Iranian oil reached the market. And more oil would gradually return to the market, helping keep global oil prices low and perhaps depressing them even further. Burdened by sanctions, Tehran has offered discounts to regular buyers such as China, India, Japan, South Korea, and Turkey. The end of sanctions would most likely mean that such consumers would pay a price more in line with global prices. Accordingly, this could create an opportunity for Saudi Arabia and other Gulf producers to increase their market share. This may happen too; Those are not willing to go with Iran due to diplomatic crisis between them has to go with Saudi Arabia and with further more recent prices;

IMPACT AND ASPECT IN NATURAL GAS, as we know the Russian Gas is the major source of energy development in Europe; As we know the Russia-Ukraine crisis erupted last year, Tehran has tried to position itself as a reliable alternative to Russia as a gas supplier to Europe and there American interest was quite vital to go with Iran side. Indeed, Iran is the only state close to Europe's borders that possesses enough natural gas to rival Russia's dominance in most European gas markets. Iranian president Hassan Rouhani even stated recently that "Iran can be a secure energy center for Europe" whereas America due to policy hurdle was not able to keep happy the European partners with Gas Supply;  And Iran's Deputy Oil Minister Ali Majedi, boasted in official Iranian media that "Iranian natural gas is Russia's only competitor for Europe." He continued that European countries could import Iran's gas through three separate routes: Turkey, Iraq, or a pipeline running through Armenia and Georgia, and then under the Black Sea. The idea of Iran as a future alternative gas supplier for Europe is acknowledged by European officials as part of their recent drive to lessen dependence on Russian imports. In April, the EU's foreign policy arm -- the Directorate-General for External Policies -- published a study of the EU's natural gas import options in light of the Ukraine crisis and concluded that "Iran is a credible alternative to Russia." However trustworthy an option Iran might be for supplying Europe, two major and main obstacles would dawdling Iran's entry into Europe's gas markets are one, the need to produce more gas and, two, the need to build infrastructure to get it to Europe. To be sure, Iran is a significant natural gas producer, generating 160 billion cubic meters a year, third globally behind just Russia and the United States. Its output constitutes about 35 percent of annual EU gas consumption. Iran also has vast reserves.

The very much interestingly, Iran is a net gas importer, with the country consuming a larger proportion of natural gas than any other country in the world. Iran's high natural gas consumption rate is due in part to its very low domestic gas prices and thus low energy efficiency. Iran imports gas from Turkmenistan and Azerbaijan, while it exports a bit less to Turkey and Armenia. In Turkey, energy industry sources have reported that Ankara is preparing its pipeline infrastructure to enable transit of Iranian gas to Europe once sanctions are removed and Oman and Iran signs the pipeline contract since last some months ago, and another private party who has proposed OMAN INDIA PIPELINE with 100% private investment, widely known as “THE GAS HIGHWAY” will be for India. Thou Pipleine it will take time but the production of Crude & Gas to make available in the market will also be taking time and investment, so both side will be hurry; More agreements to follow in news with many views in near furure; 

THE FIGHT IS ON not WAR; I mean the diplomatic fight will take place to make or break friends; Concluding the geopolitical impact, by lifting of sanctions on the Iranian oil and gas industry would have a number of geopolitical ramifications. Regarding the export of oil in particular, the strongest effect would undoubtedly be heightened tensions with Saudi Arabia, including on OPEC policy. Recently, Iranian president Rouhani explicitly criticized Saudi Arabia for what he views as Riyadh's intentional policy to keep oil prices low and threatened that "[the Saudis] will suffer." On gas, Russia would take steps to block Tehran's entry into European markets, as it has done in the past. In 2007, when Tehran inaugurated gas supplies to neighboring Armenia, Russia's Gazprom immediately bought up the pipeline project within Armenia and built it with a small circumference to preempt its future use for transiting gas to European markets.

We will see huge competition between Moscow and Tehran, could also find themselves competing for gas market share in neighboring Turkey. Already Russia's second largest gas export market, Turkey's role in Russia's gas export strategy has recently grown with Russia's proposed route change of the South Stream export pipeline from Bulgaria to Turkey. Largely, cooperation between Russia and Iran rests on a shaky basis, and once Iran is released from sanctions and its conflict with the West, many subjects of strategic competition between Tehran and Moscow will break the surface, including in the sphere of gas markets. Additional potential conflict that may emerge once sanctions are removed and Iran's natural gas industry revives is with Qatar over the delimitation of their shared South Pars/North Dome field. This natural gas field is one of the world's largest and the main source of Qatar's massive LNG exports as well as the main area where Iran has been investing in new gas and oil capacity. Conflict between Doha and Tehran over delimitation has been anticipated somewhat by sanctions and the corresponding lack of investment in Iranian production in the contested field.

Finally, the USA and its partners from Europe can reach a deal with Iran, but all players must realize the latent consequences of Iran's reentry into the global oil and provincial gas market. Most immediately, tensions could gush with other energy producers, such as Russia, Saudi Arabia, and Qatar. The downward spiral of global oil prices would also be reinforced. Tehran, it must be noted, could face serious difficulties finding markets for expanded output and attracting the needed investment in production and gas transit facilities. But in the long term, expanded Iranian output could create more supply options for European and Asian gas markets.

THE Lifting of the sanction from IRAN will give many relations and possible good number of enemies as equals to The United States; But business will go on; I feel, it is good deal for Iran and its future of economy, and at the same time, a partial profitable beneficiary will be Oman & India.

************************