17 May 2015 - 10:02
  • News ID: 241048

Iran’s Share in World Gas Market: Uncertainties and Doubts

Iran’s Share in World Gas Market: Uncertainties and Doubts

TEHRAN May 17(Shana)--Investment on LNG is the only chance for those countries with large gas reserves but far from consumption markets.

Over the recent years LNG trade has grown hugely overtaking even gas market growth.

In his address at Energy Security Summit 2015 which was entitled as "Crises and Prices: Energy Security Amidst Multiple Uncertainties", Iranian Minister of Petroleum Bijan Namdar Zanganeh said that the way of natural gas pricing does not justify construction of infrastructures for gas exports to Europe via pipeline

He said the Islamic Republic of Iran prefers to export its gas to Europe in the form of LNG.  

He added: "We do not ignore building oil pipeline for carrying gas to Europe but it is not our priority."

Gas prices vary in different markets including the U.S, Europe and Asian markets. In the U.S, natural gas prices are very low due to deregulation, competition and abundance of natural gas and shale gas but in Asia, long-term contracts and oil linked prices of gas renders high prices while in European market gas prices are something between the U.S and Asian Market prices.

Based on BP’s 2014 report, Iran sits atop the largest gas reserves in the world which stands at 33.8 tcm or 18.2 percent of proven gas reserves of the world while Russia and Qatar rank second and third with 31.3 and 27.4 tcm respectively.

In 2013, the volume of gas trade rose by 15.1 bcm reaching 1,035.9 bcm of which 325.3 bcm was transported in the form of LNG and 710.6 bcm via pipeline.

Russia and Norway with 211.3 and 102.4 bcm were the world’s largest exporters of gas through pipeline respectively while Qatar ranked first in view of gas exports in the form of LNG with 105.6 bcm. Indonesia ranked second with 22.4 bcm.  

Furthermore, in 2013 gas trade through pipeline made up 68.6 percent of the total gas trade globally while 31 percent of total gas trade was in the form of LNG.

In 2013, the Middle East was responsible for exports of 41.2 percent of total LNG exports, up by 2.4 percent against a year earlier.

Qatar that shares with Iran gas reserves of the giant South Pars gas field, maintained its first place as largest LNG exporter in 2013, assuming 32.5 percent of the total LNG exports of the world, bigger than 2012 with 31 percent.

The Middle East region took low share of 4.1 percent of gas exports via pipeline despite existence of large gas reserves in the region including South Pars gas field.

The Islamic Republic of Iran’s absence in LNG market and its very small share in gas exports via pipeline occur at a time when world gas market is growing rapidly.

Yamal LNG, a joint-venture company, estimates that LNG market will face shortage in 2018, a situation that will contribute to Russia to take a bigger share of the market.

According to Yamal LNG report, it is expected that Europe’s LNG imports will climb from 38 million tons in 2013 to 107 million tons in 2025. The report also predicts that the world will be facing as much as 50 million tons of LNG shortage up to 2020.

Meanwhile AllianceBernstein’s analysts have announced that rising LNG demand will result in rising LNG prices because implementation of those LNG projects which are yet to be decided upon, either have been suspended or have been delayed due to financial problems.

They also believe that LNG market will face shortage in the early years of the next decade unless production capacity of LNG goes up 90 million tons annually until 2020.

The idea of building LNG factories in Iran dates back to 2001. The National Iranian Gas Company (NIOC) has studied launching six LNG Projects as follows: Persian LNG with production capacity of 16.2 million tons per year, Pars LNG with production capacity of 10 million tons annually, Iran LNG with production capacity of 10.8 million tons, North Pars LNG with production capacity of 20 million tons, Golshan LNG with production capacity of 10 million tons and two small LNG projects with production capacity of 3 million tons per year. These projects had been defined for production of 70 million tons of LNG in 2015.

Had these projects been implemented as planned, the Islamic Republic of Iran would have been changed into one of the largest LNG exporters in the world. But taking power by former president and the subsequent tensions on nuclear program put a brake on advancing with the LNG projects whose construction was fully dependent on foreign investment and technology. NIOC removed the projects as the prioritized topics from the agenda unless Iran LNG project that the then-Minister of Petroleum Gholamhossain Nozari laid the groundwork for building it in 2007.

During the 20th Oil Show that opened May 06 in Tehran, the National Iranian Gas Export Company’s (NIGEC) managing director said that Iran LNG project had made progress by 35 percent.

Slow pace in interaction with foreigners and investment in vital projects of the country is taking place at a time when Qatar extracts as much as 77 million tons of gas from the gas field annually. The country exported its 105.000th LNG cargo from South Pars in March this year.

Meanwhile Russia has remained the only country that exports a large volume of gas to Europe via pipeline.

It is clear that long-term sanctions against Iran’s oil industry, weak industrial management and hesitation in implementation of development programs either has impeded developing projects or has put them on hold.

After taking office by Hassan Rouhani and returning relative calm following 8 years of tensions, now it is hoped that striking a final deal with 5+1 powers until 30 June deadline provides the opportunity for development of energy projects.

Foreign investment and international oil companies’ return could pave the way for Iran’s oil industry to gain its real place in world trade and become an influential player at LNG and natural gas world market.

By: Peyman Jounobi
News ID 241048

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