Indonesia China close to signing revised Tangguh

Indonesia and China close to signing revised Tangguh LNG deal
The Indonesian government and China's CNOOC are expected to sign a revised agreement soon for LNG supplies to China's Fujian province, Indonesian Energy and Mineral Resources minister, Purnomo Yusgiantoro said today. He said the two sides agreed in principle to raise the price of LNG from the BP-led Tangguh project during the recent visit of Indonesia's vice president Jusuf Kalla to Beijing, but gave no details of the revised price.
The Indonesian government is now likely to sign the revised Sales and Purchase Agreement during a yet to be scheduled energy conference.
CNOOC signed a 25-year SPA with Indonesia in 2002 for 2.6 mtpa of LNG from the Tangguh project starting in 2008, for its second import terminal, in Fujian. The price agreed then was believed to be around $2.4-2.6/MMBtu, based on a crude oil ceiling price of $25/bbl. The revised price is understood to be based on a higher crude oil ceiling, between $35 and $40/bbl.
Yusgiantoro said the revised contract would allow CNOOC to divert some portion of the LNG to other provinces in China, but that such deliveries would attract a premium charge. Indonesia, Iran seek partners for oil refinery
Indonesia's PT Elnusa, a subsidiary of state oil and gas firm Pertamina, is seeking partners to build a US$4 billion, 300,000 barrel-per-day (bpd) refinery with an Iranian firm, Elnusa's chief said on Tuesday.
El Nusa and National Iranian Oil Refining and Distribution Company (NIORDC), a subsidiary of Iranian state oil firm NIOC, will sign a memorandum of understanding on Wednesday to build a refinery in Indonesia.
The signing will coincide with President Mahmoud Ahmadinejad's first state visit to Jakarta.
"We are seeking partners for this project, possibly from Japan, China and others," Elnusa President Director Rudy Rajab told reporters.
He said that the equity for the refinery would go 20 percent to Elnusa, 30 percent to the Iranian firm and 50 percent to other partners.
Jeffrey Waterous, chairman of Global Union, a financial adviser to Elnusa, said it would also be canvassing companies in other countries in the Middle East, Asia and Europe that could potentially be strategic equity partners. He gave no further details.
He added 70 percent of the refinery's products would be exported and 30 percent would be supplied to the Indonesian market.
"The products will be marketed to China, Japan or to other countries. That's why we are seeking partners for the project from those countries," Rajab said.
Rajab said the refinery, which will get crude oil from Iran, will also be looking for supplies from other sources.
He hoped that, if everything went to plan, production could begin in 2010.
Indonesia, the only OPEC member in the Asia Pacific, has nine oil refineries scattered across the archipelago with total combined capacity of around 1 million bpd. However, 30 percent of the oil products it consumes are imported. Thailand-Malaysia A-18 gas output to rise by April 2007
The operator of Block A-18 in the Thailand-Malaysia Joint Development Area is implementing the second phase development of the area's gas reserves to increase output by 200,000 Mcf/d in April 2007, an industry source said on Tuesday.
Carigali-Triton Operating Company, a joint venture between Amerada Hess and Malaysia's Petronas, is developing gas reserves from the Bumi, Suriya and Bulan fields during the second phase development.
The company plans to install three production platforms and four appraisal wells to boost production from its current level of 390,000 Mcf/d to 590,000 Mcf/d on April 1 next year. Further plans target output rising to 790,000 Mcf/d from the start of 2008, the source said.
Thailand will start using gas from Block A-18 in 2008 to fuel the Songkhla power plant.
The Cakerawala gas field in the Block A-18 has been in production since early 2005. Its current output supplies three power plants in Malaysia.
Total natural gas reserve in all the JDA fields are estimated to be around 24 Tcf.

Pakistan cautioned over Mexican

Pakistan cautioned over Mexican-style financial crisis

A former World Bank vice-president warned here that Pakistan was facing symptoms that preceded the Mexican financial crisis more than 10 years ago.

Shahid Javed Burki, who was in charge of the bank's Latin American division when Mexico was hit by the crisis in 1994, cited the South Asian nation's large current account deficit and what he called excessive speculative business activity and weak banking system.

"When I look at all these things (that preceded the Mexican crisis), I can see all of them present in Pakistan today," he told Pakistani central bank governor Shamshad Akhtar at a Washington forum on Monday. "But I'm not saying it is likely to happen" in Pakistan, he said.

"So, essentially what I am saying to you is: It would be, I think, prudent on your part to worry about the worst case scenario," Burki told the State Bank of Pakistan chief, who is only three months into her job.

Akhtar, the first woman ever to head Pakistan's central bank, replied that she was aware of the "downside risks" mentioned by Burki as well as the threat posed by inflationary pressures and escalating crude oil prices that could worsen the country's trade deficit.

She said the country was already under a "monetary tightening phase" and that central bank and the national economic management team were monitoring the situation very closely.

"Further escalation in oil prices could endanger the fragile balance that currently prevails between budget management ... and trade deficit. We have to walk a very tight rope," she said.

Akhtar, a former senior official of the Asian Development Bank, said the overall medium term outlook for the Pakistani economy "is on track" based on an average economic growth of around 6.5 percent.

"I like to believe we do have the opportunity to make a difference along with my economic management team.

The general view we have in the team is we would like to closely watch the situation almost on a week to week, and month to month basis and see what policy responses we can take," she said.

Burki, citing what he called a "casino culture" prevailing in Pakistan which he said was fueled by easy credit extended by banks, disputed an assessment by Akhtar that Pakistani banks were in a reasonably good shape. He said "one particular bank gave me some numbers which I find them horrifying in terms of their exposure to weak assets." He hoped it was "not representative of the entire banking sector."

Burki said after the forum that speculative business activity in Pakistan was "being financed by the banks which are doing it on the basis of not enough reflection on their long term health -- which is what I saw in Mexico.

"If these things go sour then it will be a very quick snowballing effect," he said, adding that Pakistan's relatively fixed exchange rate system was also under pressure.

Pakistan's central bank has cut its year to June 2006 economic growth forecast to 6.0-6.6 percent, saying it was due to a sharp tail off in manufacturing and agriculture. Inflation is likely to remain at the projected 8.0 percent target, the bank said in December.

The 1994 economic crisis in Mexico was triggered by the sudden devaluation of the peso. A week or so of intense currency crisis was stabilized when U.S. President Bill Clinton decided to grant Mexico a loan to bail the country out, to the tune of 50 billion dollars.

Iran will suspend relations with IAEA

Iran will suspend relations with IAEA if sanctioned

Supreme National Security Council (SNSC) Secretary General Ali Larijani said on Tuesday that Iran will suspend its relations with the International Atomic Energy Agency (IAEA) if sanctions are imposed on the country.

Speaking at an international conference entitled "Iran's Nuclear Energy Program: Policies and Prospects", he said, "They think that Iran will back off under the pressure, but they must realize that Iran will not do so."

He insisted that no Iranian government would ever give up its national technology.

On the possibility of U.S. military strikes on Iran's nuclear sites, he said, "In this case, Iran's nuclear expertise will not be wiped out. It will only be converted from an open program to a clandestine program.

"Iran is a large country and you cannot bombard all of it."

If the U.S. harms Iran, it will be harmed too, Larijani noted.

Iran's hands are not tied, and if the enemies provoke Iran, they will suffer the consequences, he asserted.

"If you threaten and provoke us, you should not expect us to continue the same level of relations with the IAEA, and if you launch a military strike against us, we will continue our (nuclear) activities in places where you cannot reach us," he stated.

The European Union declared that they did not want Iran to gain access to nuclear expertise during earlier negotiations and private meetings, but now they say they must accept the fact that Iran has attained nuclear expertise and that it must be on the agenda of talks, he added.

He described the Europeans' contention that Iran might withdraw from all international treaties after developing nuclear technology as mere speculation, saying that this could be applied to any country and nobody should be punished based on mere speculation.

If the West sticks to negotiations, Iran will follow suit, but if the West takes extreme action, Iran will reciprocate, he explained.

Stressing that the IAEA should be responsible for dealing with Iran's nuclear dossier, he said that if IAEA Director General Mohamed ElBaradei completes his investigation of Iran in a logical period of time and if Iran's uranium enrichment activities continue along their logical course, the Islamic Republic will implement the additional protocol to the nuclear Non-Proliferation Treaty (NPT).

Commenting on the West's claim that Iran does not need nuclear energy because it has huge oil and gas reserves, he said that Iran and the U.S. signed a $6 billion cooperation agreement before the Islamic Revolution of 1979 for the construction of nuclear power plants in Iran that would have produced 20,000 megawatts of electricity.

Iran and France also signed a contract in 1974, according to which 6000 megawatts of nuclear electricity was to have been supplied to Iran, he added.

The contract between Iran and France said that a nuclear research and development center was to be established to enrich uranium for the production of nuclear fuel in Iran and to train personnel, he noted.

"Now we have to ask them why they signed such contracts with Iran nearly 30 years ago when our oil and gas reserves were larger than today, but now they claim that Iran does not need nuclear energy because it has oil and gas," he said.

Iran had signed contracts with France's Eurodif company to supply its nuclear fuel, but the company did not honor its commitments and refused to supply uranium to Iran after the Islamic Revolution, he pointed out.

"Today, we do not trust the West anymore," he said, adding, "We do not insist on producing all of our needed nuclear fuel, but we do seek to maintain our independence.

"The West left no option for Iran but enrichment while we were prepared to proceed step by step."

Elsewhere in his remarks, Larijani said that a country that wants to produce nuclear weapons does not sign the NPT.

"We accepted the voluntary implementation of the additional protocol to the NPT, too, which proves we do not seek nuclear weapons," he added.

"We have repeatedly declared that if the future plans for the nuclear program were clarified, we would be ready for every kind of cooperation. I told the European side in Vienna that we are ready to plan Iran's nuclear research and developments step by step with them," he noted.

Iran's nuclear fuel cycle program is being developed under the supervision of the IAEA, he stated, adding that currently one enrichment chain has been activated and the other chains are being completed.

So far, 2000 man-hours of inspections of Iran's nuclear sites and 26 visits to Iran's military sites have been carried out, but this situation has a limit, he said.

"We cannot open the gates of the country to inspectors because of phantom claims," he added.

Iran should now negotiate on post-enrichment stages: Rafsanjani

Expediency Council Chairman Akbar Hashemi Rafsanjani said on Tuesday that Iran should now negotiate on the stages of the nuclear fuel cycle which must be conducted after uranium enrichment.

"We should continue with our confidence-building measures and they should accept that we possess enrichment technology. Now we have to negotiate on the stages following enrichment," Rafsanjani told the conference.

The EC chairman noted that Iran's nuclear program is like a bullet that has been shot from a gun and can never return.

He noted that Iran's nuclear dossier has deviated from its natural path and this has led to various problems for Iran and many others.

He said that the IAEA has not performed its legal duties toward Iran which includes supporting the country's right to produce nuclear energy for peaceful purposes.

"And this has given bullying powers the pretext they need."

Rafsanjani stated that the Americans planned to produce 20 nuclear power plants in Iran during the previous regime and started to implement their plans with large funds.

"The same powers including the U.S., France and Germany, who were building nuclear installations in Iran in the past, are now the main countries against Iran's nuclear program.

"Nuclear installations like the Darkhuvain power plant, the Isfahan Uranium Conversion Facility and more were being constructed by these powers and we never condemned these activities at the time although we were against the Shah's regime; we did however warn over becoming overly dependent on the West."

"All those who are now announcing that Iran is in no need of uranium enrichment, were Iran's nuclear partners in the past," he said.

Referring to the problems Iran faced after the victory of the Islamic Revolution in regard to its nuclear program, he said that some countries like Germany, Russia and China tried to obstruct Iran's activities and prevent it from completing its nuclear projects.

"China had a contract with Iran to complete the Isfahan UCF but it withdrew from the project under U.S. pressure and we reached the current stage with great difficulty," he explained.

"All of the country's officials decided to conduct nuclear activities openly and to remain obligated to the NPT - and these were all signs of Iran's goodwill," Rafsanjani observed.

Turning to Russia's obligation to construct the Bushehr nuclear power plant in Iran, he said, "They delayed the completion of the power plant for about 5 years and are currently causing drawbacks in the project by raising doubts about whether they should provide us with nuclear fuel or not… and this is not a good record for a major power like Russia."

He did, however, praise Moscow for its current efforts to normalize the nuclear issue and expressed hope that it would live up to its promises.

He noted that Iran carried out nuclear research activities on uranium enrichment and had nothing to hide in regard to the production of centrifuges.

"Those who have lined up against Iran and have sent a resolution to the UN Security Council should make it clear for what wrong from the part of Iran do they intimidate and threaten us."

Behaving this way toward Iran will inflict great damage on the IAEA and the Security Council, Rafsanjani said.

Western countries are making prompt advancements in new scientific fields because they know that in the future energy will turn into a threatening bottleneck for them, he noted.

In its resolution against Iran, the IAEA Board of Governors included an article on efforts to establish a Middle East free of nuclear weapons in order to encourage Arab states to vote in favor of the resolution which are fearful of Israel's nuclear arsenal.

Having trust in an international organization is a necessity for countries that join it, he said.

"The IAEA should respond to history about its behavior toward Iran."

Rafsanjani said that most of the false accusations raised by Western media against Iran's nuclear activities, including reports of deviation in activities at the Natanz nuclear complex, came from the Monafeqin (the terrorist Mujahideen Khalq Organization) who only made the claims to be allowed to enter political centers in the West.

"The Natanz complex has been constructed beside a main road and during its construction around 250 loaded trucks arrived at the site daily; if we wanted to hide anything there were other places to use as a construction site," he said.

Rafsanjani called Iran's nuclear program a gradual, legal and open move, adding, "We suspended our activities only to win international confidence."

He noted that the main reason the U.S. is opposed to Iran's nuclear program is that it fears the Islamic Republic can turn into a model for other countries once it achieves nuclear success.

"The U.S. wants to turn Iran from a model to a lesson but it will eventually face defeat."

On the consequences of Iran's decision to continue with its enrichment program, Rafsanjani said, "Facing loss for great goals is bearable. Iran's enrichment technology belongs entirely to itself."

He stated that the only option for the West would be to accept Iran's enrichment technology.

"They wanted to force us into secrecy but our activities were always open."

Rafsanjani noted that Iran is ready to build confidence but not through bullying.

Nuclear technology has become source of national pride

Former nuclear negotiator Hossein Musavian said the nuclear issue has become more complicated due to the fact that Iran was reported to the Security Council.

"However, despite all this, the door is still open for a compromise, and the sides have not yet reached the point of no return," Musavian told the participants at the conference.

Pointing out with satisfaction that the right to nuclear technology has become a national issue and a source of pride and that all political factions and officials are in agreement on the use of nuclear technology for civilian purposes, he said, "The Iranian nation should not presume that that the Europeans are trying to deprive Iran of advanced nuclear technology.

"Iran's rights within the framework of the NPT should not be trampled upon, and those involved with Iran should give assurances that they will respect Iran's legal right to the nuclear fuel cycle according to the NPT."

The former nuclear spokesman stated that the International Atomic Energy Agency, as the only international body responsible for verifying the peaceful nature of nuclear activities of member states, can step forward and propose a formula to assure the world that Iran's nuclear activities will not be diverted from their peaceful course.

During a meeting in Paris in early 2005 between then Supreme National Security Council secretary general Hassan Rowhani and French President Jacques Chirac, the two sides agreed to work on such a proposal, he explained.

The former director of the SNSC International Security Committee noted that the ratification of the additional protocol to the NPT and an assurance that Iran will remain loyal to the NPT and continue its transparent cooperation with the agency are important tools for gaining the confidence of the international community, and Iran is flexible enough to accept all these things.

Musavian also called for proper and timely utilization of the opportunity provided by the planned Iran-U.S. talks on Iraq to decrease tension between Tehran and Washington so that negotiations on Iran's nuclear program can proceed in a calm atmosphere.