Iranian Firms Sign Major Gas Pipeline Construction Agreement

Iranian companies have signed a $2.3 billion deal to build a natural gas pipeline which is likely to facilitate exports to Europe in the future, Iranian media reported Monday.

The Iran Gas Trunkline-6 (IGAT-6) project will also boost gas exports to Iraq.

Iranian Gas Engineering and Development Company (IGEDC) and Pasargad Energy Development Company signed a BOT (build-operate-transfer) contract under which the project owner will provide 25 percent of finance and National Development Fund of Iran the rest, Mehr News Agency reported.

The contract includes building 590 km of pipeline up to the border with Iraq in addition to five gas compressor stations in two years.

Mehr reported that 611 km of pipeline between Assaluyeh and Ahvaz is already complete.

Iranian gas exports to Iraq has repeatedly been delayed due to fragile security situation in the country.  

"Iran is prepared to export gas to Iraq but insecurity in Iraq and the presence of ISIL have held up the exports," Ali-Reza Kameli, managing-director of National Iranian Gas Exports Company told Shana News last month.

He said when Iran will start pumping gas to Iraq depends on the security situation in the region. Supplies were expected to begin by the end of May. 

The two countries have signed a deal under which Iran will export gas to Baghdad with a daily volume of 4 mcm which could increase to 35 mcm/d. A second gas deal is expected to be signed next year between the two nations. Post the six year deal Iran will start supplying 5mcm/d of gas to Basra. The deal requires Iran to raise gas exports to Basra to 30 mcm/d.