The next battleground for the Iran deal is now predictably, being played out throughout Washington DC’s lobbying firms as major corporate and business interests line up on both sides to lobby Congressional leaders on their support for the deal. The Obama Administration has been considering making the deal an executive agreement, which would circumvent the “treaty” label and exempting the deal from Congressional approval, but exposing it to greater executive discretion in execution in the next administration, which may be Republican.
The clincher is now NY Senator Chuck Schumer, whose powerful connections to the pro-Israel lobby make him an important voice in the ongoing debate. What does this all mean for Iran, however? It appears as though Iran is proceeding as if the deal is a shoe-in at this point, despite all the fuss in the Senate and in Republican primaries. Iran has selected some 45 oil and gas projects to showcase to international companies at a conference in London in December as part of its stated goal to double the country’s crude output on December 14-16. Heading the committee in charge of this presentation will be Mehdi Hosseini, chairman of the oil contracts restructuring committee.
As a result, large oil majors have begun to lobby on behalf of the deal, but the contract details on the Iranian end have yet to be worked out. Hosseini has stated the contracts would resemble traditional production sharing models with “different characteristics” offering investors payback in the form of cash or oil allocation, and would prohibit taking direct ownership of the country’s energy reserves. He additionally claimed that extraction costs in Iran are about $8-10 a barrel or so – a statement which has yet to be verified, as that would put it below the cheapest producers of oil in Saudi Arabia, which averages extraction costs at $20 per barrel.
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- Kyrgyzstan’s user base of mobile phone customers has grown to 7.8 million, up from 7.5 million at the end of the 2014 according to a statement by the State Communications Agency – mobile services have had a transformative effect on the Kyrgyz economy and the continued growth of the user base, while sluggish, could portend greater investment in the country’s telecommunications infrastructure.
- The effect of the yuan’s devaluation is rippling through Asian economies, causing a crisis for policymakers in Asian central banks grappling with slower growth and falling exports. If they too let their currencies fall along with the yuan, there is a risk of spiraling inflation. Devaluation creates a situation known in international economics known as “beggar-thy-neighbor” which is the onset to a cascade of competitive devaluations in what is sometimes termed a “currency war.” Thus far, no Central Asian banks have followed the yuan in devaluation yet.
- The International Monetary Fund (IMF) has raised the Kazakh GDP forecast to 3.25% expected growth for 2015 after a consultation with the government on July 31 – an odd move considering the difficulties Kazakhstan’s economy faces like the sliding balance of trade towards negative territory as well as lower income and profitability thanks to oil prices and an unfavorable valuation of the tenge despite the sterilization bonds issued in 2014 by the government.
- Kazakhstan is Central Asia’s largest grain producer and it has raised its export forecast for the 2015-2016 harvest season to almost 8 million tons, reported the Agriculture Ministry. Exports are typically directed towards neighbors throughout Central Asia as well as Caspian states like Iran and Azerbaijan – of greater interest was the fact that there was no reason listed for the change in the export forecast given. The figure represents a substantial output increase from last year at 6.4 million tons.
- Stratfor has an interesting article about civil and governmental unrest in Kazakhstan, as well as the possibility that a volatile succession scenario to Nazarbayev could be descending sooner than analysts have predicted. Many of the state-owned energy subsidiary workers, such as those of UzenMunaiGaz (subsidiary to KMG) went on strike over wages, with some 14 dying in the ensuing riots around Zhanaozen. Additionally Nazarbayev has been purging party officials on the usual charges of embezzlement and corruption and the government has been caving in to demands from oil workers to form unions. Likely the pension scheme announced on Tuesday by Kazakhstan is attempting to offer new incentives to unions to play ball in times of extremely low energy prices.
- Mongolia’s cabinet has approved a coal railway project that would stretch some 547 km from Erdenet – Ovoot and form one of the legs in an eventual Russia to China railway corridor. The agreement will allow Northern Railways, a subsidiary of Australian Apsire Mining to build and operate the railway for 30 years – but the contract to build has been given by the Australian company to the China Railway Construction Corporation (CRCC). This will likely improve the prospects for the Tavan Tolgoi coal deposit, which will be dependent on strong transportation infrastructure to meet end markets.