Exclusive: Iran Should Take 10% Share of Global Gas Market says NIGC Chief

Iran should take ten percent of the global gas market, Azizollah Ramezani, the National Iranian Gas Company (NIGC)’s director for international affairs told Natural Gas Europe during an exclusive interview.

“Based on the national outlook plan, we should take ten percent of the global gas market, but for the time being, we are lagging behind the target,” he added.

Iran's current raw gas output stands at 660 million cubic meters per day (mcm/d), but this figure is expected to increase to 1,100 mcm/d by 2019.

Ramezani went on to say that Iran is forecast to boost its natural gas production by 100-120 million cubic meters per day (mcm/d) in the current Iranian fiscal year, which started on March 21, 2015. 

However, he said that realization of the goal will be dependent on the implementation of development projects, mainly in the South Pars gas field, which Iran shares with Qatar in the Persian Gulf.   

The country is projected to export 55 mcm/d of refined gas in the current fiscal year Ramezani said, adding that gas production and exports are planned to be increased by 100 mcm/d and 10 mcm/d, respectively, in the next fiscal year.

Iran’s fiscal year starts on March 21. 

“We should change our approach from domestic consumption to the global trade. Currently, our share of the international gas market is very low despite huge reserves.”

Iran should take its real share of the global gas market over the next ten years after lifting of the sanctions against the country, he stressed. 

Iran increased gas production by 10 percent to 202 billion cubic meters per annum (bcm/a) last fiscal year, ending on March 20th, while the figure re-increased by 5 percent during the first half of current fiscal year, according to Iran’s Oil Ministry. However, all of the increased output has been absorbed by domestic sectors, while the huge gas shortage in some sectors like electricity generation and re-injection to oil fields continues. Iran says it has planned to increase gas production to about 400 bcm/a by 2019.

Iran and the P5+1 (the US, UK, France, Russia, China + Germany) reached a nuclear deal on July 14th, which paved the way for the elimination of sanctions on Iran by late 2015, including a gas import ban by the EU.

According to BP statistics, natural gas trade in the world was 663.9 billion cubic meters (pipeline trade) and 333.3 billion cubic meters (LNG trade) in 2014.

Iran has the long-term potential to become one of the world's top gas producers, thanks to its 34 trillion cubic meters of natural gas reserves, which amounts to some 18 percent of the world's total.

Iran gas export projects

Elsewhere in his remarks, Ramezani referred to the Iran LNG project which is aimed for constructing a liquefied natural gas (LNG) plant in Assaluyeh, neighboring the Persian Gulf. “The project is complete by over fifty percent and we can enter the global market of LNG over the course of 2-2.5 years.” 

Negotiations have been already made with some foreign companies to complete the project, he added. 

Iran started to build the mentioned project, spending $2.5 billion on it but international sanctions blocked the work. If the construction restarts, the first Iranian LNG will go to market in 2018, according to the Energy International Risk Assessment.

Ramezani touched on the third summit of the Gas Exporting Countries Forum (GECF), which is scheduled to be held in Tehran on November 23rd, adding that the new global gas model, studied during last five years, will be unveiled in the summit. 

The new model will be highly beneficial to the GECF member states for making investment plans and also developing their export markets, he noted. 

He emphasized that given the growing demand for gas in the world it will not be practical that a single country dominate the world’s gas market in the future. 

Referring to gas exports to Iraq, Ramezani said: “We are ready to start gas exports to the neighboring country. A section of the pipelines on Iraq’s territory (towards Basra) is nearly complete. The Iraqi side has announced that the pipeline will be complete by the end of 2015.” 

On November 11th, Iran and Iraq signed a 6-year deal, based on which 25 million cubic meters per day (mcm/d) of Iranian gas will be transferred to feed three power plants in Iraq’s port city of Basra. 

Based on the another agreement signed between two countries in 2013, Iran is expected to initially deliver 4 mcm/d of gas to Iraq’s capital Baghdad, and raise it to 25 mcm/d in the future, to feed the power plants through a 270-kilometer pipeline.   

Therefore, based on the two agreements, Iran should deliver 50 mcm/d of gas to Iraq by 2017.

Regarding a project for exporting gas to Oman, Ramezani said that a consulting company has been selected to conduct onshore studies of the project. 

In March 2014, Iran and Oman signed a memorandum of understanding under which Iran will supply Oman with 10 billion cubic meters of natural gas per year in a 25-year deal valued at around $60 billion.     

A 260-km pipeline to transfer Iranian gas to Oman is expected to come on stream within three years.   

He also said that Iran has completed the Iranian section of the Iran-Pakistan gas pipeline (Peace Pipeline) and is waiting for the Pakistani section to be completed. 

The pipeline is meant to transfer 22 mcm/d of natural gas from Iran’s South Pars gas field in Assaluyeh to Pakistan. A major portion of the Iran section (900 km) has been constructed and needs around 200 kilometers to be complete. Iran long pressed Pakistan to build its part of the scheme. However, Pakistan has so far failed to implement its share of the project due to what officials say to be a lack of funds.

Meanwhile, Ramezani said that completing the 9th Iranian Gas Trunkline, which is intended to export gas to Turkey and from there to Europe, is atop agenda. 

The pipeline will stretch about 1800 kilometers inside Iran and about 2000 kilometers on the Turkish territory to reach Europe. It is anticipated that Europe can import 35 billion cubic meters of gas per annum from Iran through this pipeline, as Iranian officials have said. 

Iran is Turkey’s second supplier of gas after Russia, providing for one-fifth of the country’s consumption. Azerbaijan is another supplier.

Iran says it is ready to raise gas exports to Turkey which receives about 10 billion cubic meters of gas from the Islamic Republic a year under a 25-year deal signed in 1996. 

Turkey says Iran’s price is too high, charging $490 for every 1,000 cubic meters versus $335 and $425 by Azerbaijan and Russia respectively.