The Iran Nuclear Deal Hits Yet Another Hurdle

Politics, Geopolitics & Conflict

Unrest and instability in Iraq is far from over, even as the situation has calmed in the streets of the Green Zone after 30 people were killed and hundreds wounded when protesters loyal to Shi'ite cleric Moqtada Al-Sadr stormed the presidential palace earlier this week. Al-Sadr later called off the protesters, but he's not going away-nor is the inter-Shi'ite rivalry that is pitting Al-Sadr against pro-Iranian factions. The protests took place when al-Sadr said he had resigned from politics, but we shouldn't read too much into this. He's done this before and walked it back.

In its response to Iran on the final draft of the nuclear deal, Washington is believed to have told Tehran that sanctions-lifting could be delayed if Iran continues to link the UN investigation into prior undeclared nuclear activity to the deal. This is a key point that remains unresolved. Iran continues to demand that the IAEA close that investigation before a new nuclear deal is implemented. Iran is also demanding stronger guarantees on the lifting of sanctions before agreeing to a deal.

The Israeli could end up postponing gas extraction in the Karish gas field, which is disputed with Lebanon. While the Israeli media is citing officials as claiming that technical issues would cause a potential postponement, it is not clear whether the FPSO is having financing issues or whether this is a response to the escalating dispute with Lebanon, where Hezbollah is threatening to attack if Israel begins extracting gas. Israel's FPSO will have a production capacity of 8 billion cubic meters per year.

UK elections for the new leadership of the Conservative Party are shaping up to be all about energy. Now, they are specifically becoming about North Sea oil. Candidate Liz Truss, as prime minister, would ramp up North Sea exploration. Truss, in fact, has said she would drill up to 130 new oil and gas wells, in direct contradiction to Boris Johnson's energy policy. Results will come on Monday for the new conservative leadership.

Keep an eye on Eni SpA's operations offshore in Mozambique's south (the Coral-Sul floating LNG project), where the first vessel for what would have been the country's first LNG export cargo was supposed to arrive this Monday at an offshore platform but never showed. The vessel changed course over the weekend, according to Bloomberg, for reasons that remain unclear. Other tanker tracking sources say the vessel is still on course to dock at the platform on September 9th. Mozambique has more woes in the north. While the government had earlier signaled that an insurgency in the north, meanwhile, was being successfully pushed back, French TotalEnergies project in the Cabo Delgado Province is still under threat. Force majeure was declared in April 2021, and its lifting remains unclear. Some are speculating that work on the LNG project could resume in the first half of next year, but this is assuming the government can get the insurgency under control.

Ukraine's nuclear power plant in Zaporizhzhya was shut down as the result of Russian shelling, according to its operator-Energoatom. Ukrainian Energoatom engineers are running the plant but Russian occupiers are in control. One of the reactors shut down right before the IAEA team arrived for an inspection. The team was also delayed by shelling nearby.

In the European Union, Germany has hit 80% gas storage while Russia has shut off flows to Nord Stream 1 (again) for three days for maintenance. Europeans are on edge over the potential for Russia to delay a restart, with Germany claiming that there was no logical reason for "maintenance" on the pipeline. At the same time, Hungary has signed a deal for additional Russian natural gas from Gazprom.

Deals, Mergers & Acquisitions

German-based IKAV, an asset management company, will acquire California-based Aera Energy LLC, a JV of Shell and Exxon, for $4 billion. Aera is responsible for around 25% of California's oil. The sale requires regulatory approval.

Toyota will invest some $5.6 billion in EV battery production in both Japan and the U.S., with production set to begin between 2024 and 2026. The company is also speeding up its EV lineup, while up until now it has focused more on hybrids.

In line with Saudi Arabia's Vision 2030 plan, the Saudis are taking major steps to transform the Kingdom's mining sector into its "third pillar" of industry. This week, the Saudi mining and mineral resources ministry announced a multi-round auction for Khnaiguiyah exploration licenses on September 4th. The 353+ square-kilometer license area is the largest in Saudi Arabia, with a stated potential estimated at around 25 million tonnes of ore, with over 4% zinc and less than 1% copper. Three local consortiums are participating in the auction.

Discovery & Development

Algeria's state-owned firm Sonatrach has announced its first new oil discovery in nearly three decades in Ardar province. Sonatrach estimates the well holds between 48 million and 150 million barrels.

Regulations & Litigation

Exxon has taken its first step toward suing Russia over the Sakhalin-1 project in the Far East by notifying the Kremlin of its intent. A Putin decree is keeping Exxon from exiting the project by selling its 30% stake.