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Proposed Iran-Oman Gas Pipeline Requires Lifting Of US Sanctions

Dalga Khatinoglu
Dalga Khatinoglu

Oil, gas and Iran economic analyst

May 22, 2022, 18:20 GMT+1Updated: 17:30 GMT+1
Oil terminal loading pipeline on Persian Gulf
Oil terminal loading pipeline on Persian Gulf

Iran’s official news agency IRNA reported that during oil minister Javad Owji’s visit to Oman the two countries agreed to revive an offshore gas pipeline project.

Neither Oman’s oil ministry nor Omani media have confirmed this agreement after the Saturday meeting.

Iran and Oman signed a memorandum of understanding (MoU) in 2003 to construct a 200-km pipeline from Iran’s Kuh-e Mobarak to Oman’s Sohar port, estimated at the time to cost about $1.2 billion. Based on the deal, Iran was expected to start delivering 10 billion cubic meters per year (bcm/yr) to Oman in 2008 for 25 years. But the deal never materialized due to increasing tensions between Iran and the West, resulting in international sanctions imposed gradually around 2010 to restrict Tehran’s nuclear program.

Neither Iran nor Oman has the technology to lay a pipeline in the deep waters of the Sea of Oman that in some spots reach the depth of one kilometer. As long as American sanctions against Iran remain, no major global company will be willing to get involved in the pipeline project.

Iran has capacity only to construct offshore pipelines in less than 150-meter depth.

A view of Iran oil and gas center in Asalouyeh on the Persian Gulf. FILE
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A view of Iran oil and gas center in Asalouyeh on the Persian Gulf

During the last two decades, Iran and Oman had tens of meetings to keep the deal alive, without any progress. Last time, several months before the US withdrawal from the nuclear deal with Iran (JCPOA) in May 2018, Iran and Oman had agreed to revive the project.

Why Oman needs Iranian gas?

During last decade, Oman’s annual gas production growth stood at 4.4% in average, but its annual demand grew by 6.3%. The country then began facing gas shortage for its LNG plants with 10.7 million tons (about 15 bcm/yr) capacity to liquefy the gas and export to the international markets.

According to British Petroleum’s statistics, Oman’s LNG exports broke a 14.8 bcm record in 2019 but declined to 14 bcm in 2020.

Iran plans to use the idle capacity of Oman’s LNG plants (2 bcm/yr in future) to liquefy its gas and export to international markets. The rest of Iranian gas is projected to be delivered to Oman for domestic use.

BP has been developing Oman’s Khazzan gas field to boost its production capacity and Oman’s LNG plants’ capacity is also expected to increase to around 16 bcm/yr in 2022.

But, Oman’s gas reserves are only 700 bcm and regarding its 50 bcm/yr domestic annual demand (including 13 bcm/yr gas injection to oil fields to enhance their productivity) as well as 16 bcm/yr LNG plant capacity, it needs to import gas in the long term.

Iran with 33 trillion cubic meters of gas reserves ranks second globally after Russia, but it faces a huge amount of gas shortage in winters, when domestic demand soars to peak level. Iran is deprived of foreign expertise and an estimated $40 billion investment needed to boost its gas output.

On the other hand, Iran’s gas demand increased by 6 bcm to 238 bcm last year. Its annual gas demand growth was 5.2% in average during last decade, while its gas production growth is very low due to sanctions.

Mohsen Khojastepur, former general director of the Iranian national oil company said in November 2021 that if new investments are not made in the natural gas industry, the country will become a net importer in the next few years.

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IRGC Quds Force Colonel Assassinated In Tehran

May 22, 2022, 17:09 GMT+1

A member of the Quds Force of Iran’s Revolutionary Guards was killed Sunday afternoon after being shot five times by unknown gunmen riding a motorcycle in downtown Tehran. 

According to Tasnim news agency, affiliated with the IRGC, the slain officer was a colonel who had earlier fought in Syria. He was assassinated while he was in his car in front of his home.

In a statement, the IRGC blamed "counterrevolutionaries and elements affiliated with the global arrogance" for the assassination of the colonel, identified as Hassan Sayyad-Khodayari. Global arrogance is a term used by the Islamic Republic to refer to the United States.

In another statement that seemed like an attempt to compensate for the security lapse in Tehran, the IRGC and Iran's Intelligence Ministry announced they had discovered and captured a team of "thugs" linked with Israel's Mossad. 

The statement said the Israeli intelligence networks "were engaged in stealing and damaging public and private properties, kidnapping and getting forced confessions".

Earlier this month, a man who had confessed to planning assassinations on behalf of Iran’s Revolutionary Guards in an audio tape claimed he was coerced by unknown people into making the confession.

Saudi Arabia, US Reiterate Common Vision To Confront Iran Threats

May 22, 2022, 14:51 GMT+1

Saudi Deputy Defense Minister Prince Khalid bin Salman Al Saud and US State Secretary Antony Blinken have affirmed their countries’ common vision to confront Iran’s destabilizing policies in the region.

The two, who met in Washington on Saturday, reviewed the strategic relations between the Kingdom of Saudi Arabia and the United States and ways to strengthen them, the Saudi Press Agency reported on Sunday.

Blinken reiterated the US commitment to strengthen Saudi Arabia’s defenses, efforts to counter Iranian threats, and the importance of maintaining strong international support for Ukraine. They also discussed managing pressures in global energy markets stemming from Russia’s invasion.

They discussed the latest developments in Yemen and expressed strong support for the UN-negotiated truce, with Prince Khalid reaffirming Riyadh’s aspirations for the Yemenis “to reach a comprehensive political solution that would move Yemen to peace and development.”

On Thursday, the new United States military commander in the Middle East said that Iran remains the most destabilizing force in the region, calling for coordinated efforts to confront the threats by Iran.

General Erik Kurilla of CENTCOM said that Iran’s uranium enrichment, ballistic missile development, and regional proxies, particularly the Houthis in Yemen, had repeatedly been central to his conversations with America’s strategic partners during his recent tour of Egypt, the United Arab Emirates and Saudi Arabia.

Iran Exempts Armed Forces, Intel Ministry, Nuclear Organization From Transparency

May 22, 2022, 14:16 GMT+1

The Iranian parliament has exempted the Armed Forces, the Intelligence Ministry and the nuclear organization from a plan aimed at augmenting transparency of the executive, legislative and judicial branches of the government. 

According to IRNA on Sunday, the National Security Council as well as the provincial and city security councils are also excluded from the plan that is expected to obligate members of parliament and state officials to make their votes and decisions available to the public. The details of the negotiations in various parliamentary committees will also be available to the public.

The parliament also makes the publication of final rulings of the general and revolutionary courts conditional upon "observance of security standards".

Moreover, the Guardian Council and the Assembly of Experts are not included in the plan in the first place. 

However, according to the bill, all private institutions in charge of public services, including Iran Central Bar Association, Medical Council of the Islamic Republic, and Justice Experts' Association, as well as non-governmental organizations and charities will be included in the transparency plan and will be fined for non-compliance.

The measure also makes it mandatory for the entities as well as municipalities of cities with over one million population to register and regularly update data about their financial statements, budgetary performance, project investments, and number of employees.

According to the annual ranking of countries released by Transparency International earlier this year, Iran ranks 150 out of 180 countries in the 2021 Corruption Perceptions Index.

Iran's Raisi Talks About Upcoming Hard Economic Decisions

May 22, 2022, 11:29 GMT+1
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Iran International Newsroom

President Ebrahim Raisi spoke at length about the economy first time after protests rocked parts of the country in response to government raising food prices.

The official news agency IRNA reported on Saturday, May 21, that “Hundreds of experts and businessmen took part in the gathering” the agency called “the first international privatization event in Iran.”

Speaking at the event, Raisi did not mention last week’s protests or the security forces violent treatment of protesters particularly in Iran’s western provinces. However, as economic journalist Maryam Shokrani has observed, he emphasized “hard decisions to be made which some people may not agree with.”

Raisi also focused on the controversial issue of privatization in Iran and opined that “Privatization does not mean abandoning industrial units. It is the beginning of the government’s supervision on privatized companies.”

The Islamic Republic’s government, religious institutions and the Revolutionary Guard (IRGC) directly or indirectly own 80 percent of the economy, amid nepotism and corruption which has led to paralyzing mismanagement.

For the past 15 years successive governments have talked about privatization, but with a fearsome security apparatus and with power concentrated in the hands of insiders, only they have been able to benefit from the sell-off of government assets.

During the past years, hundreds of workers of privatized companies, particularly in Khuzestan and in the Central Province, protested to the privatization process that has handed over many government companies to well-connected but often disinterested and non-expert individuals who only used the assets to take hefty loans from government banks with no intention to pay back.

Many of these companies including the Sugar Mill at Haft Tappeh and the Heavy Equipment Factory in Arak which used to be profitable in the past, are currently on the verge of bankruptcy according to their workers.

Post-revolution privatization during the past four decades has been criticized by the people, workers and businesses alike. Many believe that profitable businesses have been handed over to the IRGC which effectively owns the lion’s share of productive companies in Iran.

While Raisi said on Saturday that privatization empowers the private sector, many have often charged that the IRGC’s acquisition of companies has left little room for the private sector in Iran.

However, Raisi called for looking back and reviewing the privatization process that has taken place. He said, “fair and critical review of the past is essential and inevitable,” so that lessons could be learned, and corruption could be prevented.

Raisi spoke about motivating “non-government businesses” while the government’s intervention in the market has led to an increase in the price of essential commodities and inflation in Iran that led to protests, during which people called on Raisi and Supreme Leader Ali Khamenei to step down and chanted slogan in favor of a secular government.

In an interview published by Didban Iran website, Iranian sociologist Mohammad Reza Mahboobfar warned that the current economic situation, particularly the policy and eliminating food and fuel subsidies has already led to social problems such as an increase in crime including stealing food.

He said the protests last week raised the alarm for the statesmen that Iranian society is being divided into a majority of extremely poor people and a minority of super-rich individuals. Mahboobfar warned that what has been characterized by government officials as an “economic surgery” should be stopped at once as the widening gap between socio-economic classes has become cause for concern.

Mahboobfar warned: “Making the masses apprehensive is dangerous.”

Wife Of Swedish-Iranian Doctor Facing Execution Appeals To EU For Help

May 22, 2022, 10:49 GMT+1

The wife of the Swedish-Iranian scientist Ahmadreza Djalali, whose execution was planned for May 21, has appealed to the EU for help, saying the Islamic Republic is considering postponing the sentence.

Vida Mehrannia said in an interview with Germany’s ZDF channel Saturday evening that her husband is not executed yet, expressing hope “that the EU can really act decisively in order to bring Ahmadreza home”.

She said that the EU must “not allow an innocent man to be killed in such an inhuman way".

Djalali was arrested while visiting Iran on an invitation by a university in 2016 and consequently sentenced to death on unsubstantiated charges of espionage for Israel. Espionage is a charge Iran often uses against foreigners and dual nationals that they want to hold as a bargaining chip.

Amnesty International on Thursday accused the Islamic Republic of taking Djalali "hostage" and using him as “a pawn in a cruel political game."

The United Nations human rights office also urged Iran last week to halt the execution and rescind Djalali’s death sentence.

Amnesty provided a detailed research and analysis to prove that Iranian authorities are threatening to execute Djalali to compel Belgium and Sweden to hand over two imprisoned former officials, and “to deter them and others from future prosecutions of Iranian officials”.

There has been speculation that the announcement of Djalali’s execution was intended to influence the trial in Sweden of Hamid Nouri, a former Iranian official, over his alleged role in a wave of prison executions in Iran in 1988.