Iran puts its foot down on the gas
Complex Made Simple

Iran puts its foot down on the gas

Iran puts its foot down on the gas

In spite of threats of international sanctions over its nuclear programme Iran has no shortage of customers for its oil and is pressing ahead with broader energy development in particular natural gas.

    More than 20 countries are seeking to buy Iranian gas according to National Iranian Gas Company's export director Nasrollah Seifi. Kuwait, Oman, the UAE and Bahrain and Yemen as well as Turkey and most European countries have expressed willingness to buy Iran's gas he says.

    Swiss-based trading companies are emerging as big purchasers agreeing recently to buy up to 4.5 billion cubic metres a year of gas to be supplied via Turkey destined to supply customers in Italy and elsewhere in Europe.

    Increasingly Iran is looking to non-western developers to purchase its gas and to develop the country's natural gas potential. Potential commercial partners include China, Pakistan and India, Azerbaijan, Armenia, Georgia, Ukraine and Belarus.

    $16bn gas deal

    In January, National Iranian Oil Company and Malaysia's independent power developer SKS agreed a $16 billion, 25-year programme to exploit the Ferdos and Golshan offshore gas fields in south-eastern Iran.

    Golshan located 65 kilometres offshore is said to hold 50 trillion cubic feet of gas while the Ferdos deposit, 85 kilometres offshore has estimated reserves of 10 trillion cubic feet.

    Pakistan's Petroleum and Natural Resources Minister Amanullah Khan Jadoon says meanwhile that that a proposed Iran-India-Pakistan gas pipeline is in the "final stage of process." The main sticking point has been over the pricing formula for the gas rather than pressure from Washington that it should be shelved.

    Iran's estimated gas reserves at 971 trillion cubic feet are the second highest in the world after those of Russia. Much of this potential lies in the South Pars offshore gas field shared between Qatar and Iran, 80 kilometres south of Assaluyeh.

    One part of the development strategy involves Russian collaboration and investment to pipe the gas north for export and for re-injection into Iran's Aghajari, Ahwaz and Mansouri oilfields.

    $11bn South Pars revenues

    External sales of gas from South Pars could eventually be worth $11 billion a year and Tehran is anxious to press ahead in spite of the constraints on foreign investors which have delayed progress by western companies such as Total, Shell and Spain's Repsol

    As well as courting Asian companies, Tehran has sought to counter the cautious approach of western companies, for example, by giving Iran's Revolutionary Guards (Pasdaran) a $1.3 billion to construct a 900-kilometre pipeline to link the field with Iran's mainland.

    But even with such moves, Iran may find it difficult to fulfil its ambitious export strategy with some suggesting that the country may soon be unable to export gas due to an urgent need for gas for re-injection into oilfields as well as power generation.

    In January Iran was forced to halt gas supplies to Turkey to make up for the shortfall.
    A recent US report says the situation will persist even when South Pars comes on stream because Iran's energy demand is growing faster than available supply.
    AMEinfo Staff

    AMEinfo staff members report business news and views from across the Middle East and North Africa region, and analyse global events impacting the region today.

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