Iran Sees High Gas Output, Increase in Usage Growth

While Iran is preparing to boost its raw gas production capacity from the current 700 million cubic meters per day (mcm/d) to 1,100 mcm/d by 2018, the country's plans indicate a new wave of gas consumption growth in coming years, a fact that casts a shadow on its export might. 

During recent weeks Iranian officials announced a $4.8 billion fund for gasification of more than 3 million households as well as $1.2 billion budget to connect 19,000 industrial units to national gas network by 2018.

Currently, over 19 million households and 73,000 industrial units reach natural gas fuel.

Regarding the fact that Iran's total refined gas consumption stands at 174 billion cubic meters (bcm) while housing and industrial sectors consumed 91 bcm/d and 34 bcm during the last year, then these sectors share more than 70 percent of Iran's total refined gas consumption. 

As a result, increasing gasified households and industrial consumers by 16 percent and 26 percent would lead to a surge in gas consumption growth.

On the other hand, currently Iran supplies the petrochemical units with 35 mcm/d of gas to produce about 45 million tons of petrochemical products annually, but Iran has projects worth $70 billion to increase this volume to 120 million tons by 2020 and 180 million tons by 2025, which will lead to more gas consumption growth.

The country's power sector also consumes about 50 bcm per annum (bcm/d) of refined gas, while some 20 bcm/a in gas is needed to curb burning liquid fuels (about 19.5 billion liters of diesel and fuel oil) there. The country's power generation growth pace is also very high. For instance, Iran added 2.87 gigawatt (GW) to its power generation capacity during last year, while for the current fiscal year it's expected that power production level will increase by 2.5 GW to about 75.6 GW. 

As statistics indicate, over the past several years, Iran has increased power generation significantly. For comparison - Iran's power generation capacity was 56.5 GW in 2010, while this figure in 2004 was only 38 GW. As the official statistics indicate, Iran's power generation capacity doubled during the last decade. Therefore, it is expected the country's power plants would need gas fuel increasingly in coming years.

The consumption growth pace is not limited only in the mentioned sectors.

About 80 percent of Iran's active oil fields are in their second half-life and Iran re-injects about 34 bcm/a of raw gas into these fields to slow the production decline pace, but this figure is not enough and Iran needs to double this figure as soon as possible.

What is the solution?

The facts mentioned above indicate that Iran will not become an important gas supplier in international markets at least in the mid-term because of huge shortages and demand growth for natural gas. However, Iran can attempt to halve its energy intensity.

Iranian Energy Conservation Company CEO Nosratollah Seifi announced on August 17th that the country has lost the chance to lower energy intensity by 19 percent during the years 2010 to 2014. According to a national plan, Iran is scheduled to lower its energy intensity by 50 percent by the year 2021.

From 2009 to 2014, Iran lost 3,600 million barrels of oil equivalent energy, he said.

Energy intensity is a measure of the energy efficiency of a nation's economy. It is calculated as units of energy per unit of GDP. 

Energy intensity in Iran is two times more than the global average, according to the World Bank's estimations. Iran consumes about 2 billion barrels of oil equivalent primary energy annually, while natural gas shares 72 percent in this volume.  

Seifi further said that for a GDP of 6 percent, Iran must reduce energy intensity by five billion barrels of oil equivalent by 2021. He noted that doing so will require $192 billion investment and will reduce the emission of 1,800 million metric tons of carbon equivalent.

Renovating the Tehran subway, launching subways for eight big cities of Iran, discarding 400 thousand old gasoline-powered motorbikes and replacing them with the same number of electric bikes are among plans to reduce energy intensity in Iran.

Iran, with 34 trillion cubic meters of gas, as well as 158 billion barrels of oil reserves, ranks second and forth as primary energy holder in the world, but due to huge consumption rates, it is suffering from energy shortage.

Dalga Khatinoglu is an expert on Iran's energy sector and head of Trend Agency's Iran news service