As a result of normalized
prices, new suppliers like the United States have stepped into gas market. Until
2005, the US was a leading importer of gas in the world. Now it is a major gas
exporter whose consignments have come even as far as the Persian Gulf region,
which is a hub of oil and gas in the world. Other countries like Australia,
which used to be insignificant producers, are now among to suppliers of gas.
Australia is set to
overtake Qatar which is currently the largest producer of liquefied natural gas
The new players have
created a new space in the market, and have changed the import-export balance.
For example, Japan is currently the largest importer of gas in the world;
however, within upcoming years it will become the fourth largest importer behind
countries like China and India.
The gas market is
currently dominated by tight competition. Gas contracts in Europe have been
modified significantly because Europe is winning more customers due to its
focus on LNG. Environmental issues and energy supply security concerns are
among factors affecting global gas market. Except the US, all countries agreed
under the Paris climate agreement – COP21– to shift from a high-carbon society
to a low-carbon one. Gas remains the cleanest fossil fuel whose contamination
rate is 40% of oil contamination. Gas is introduced as a clean fuel in the
world because it is accessible and affordable when compared to other fuels.
Last year, Europe granted $106 billion in subsidies to encourage people to use
clean fuels like gas.
Iran holds around 485 tcf
of gas, which is estimated by BP to be the largest in the world. However, only
191 tcf of Iran's gas is recoverable. Therefore, investment in this gas fields
in Iran could be logical, as Iran is a potentially big player in gas market, as
well. The country is following up on gas pipeline projects alongside its LNG
Merely having gas
resources could not transform a country into a producer and exporter of gas.
Therefore, the volume of gas extracted and produced is a determining factor. In
recent years, gas has been recovered from the supergiant offshore South Pars
gas field which Iran jointly owns with Qatar in the Persian Gulf. Many projects
have been under way for increasing gas recovery from South Pars; however, the
country still envisages development of export infrastructure like the Iran Gas
Trunkline 6 (IGAT6) and gas pressure booster stations in order to enhance its
share of gas trading market, particularly in neighboring countries.
IGAT6 is one of the most
strategic gas trunklines in Iran. The trunkline, which is in the final stages
of production, is expected to come online in January.
project would carry 110 mcm/d of gas from Assaluyeh to western and northwestern
provinces. IGAT6 would facilitate gas exports to Iraq via Shalamcheh and
Iran is currently exporting
50 mcm/d of gas to neighboring states, up 64% year-on-year. The Ministry of
Petroleum plans to raise Iran's share of global gas trading to 10% by 2021.
That would see Iran's share of gas trade increase seven-fold.
Turkey, Sustainable Gas
In the wake of the 1979
victory of the Islamic Revolution, as soon as Iran's gas export to the Union of
Soviet Socialist Republics (USSR) was halted Turkey was considered as the first
market for Iran's gas exports. Therefore, Turkey is the oldest buyer of Iran's
gas. Iran signed an agreement with Turkey in 1996 for selling gas. Under the
agreement, Iran can reduce the flow of gas to Turkey in winter when domestic
Gas export to Turkey is
carried out through the extension of IGAT-2, which is the main source of supply
to Fajr-e Jam gas refinery. This pipeline is extended as far away as Qazvin
before going to West Azarbaijan Province to be extended to Turkey via the
Bazargan border post.
Iran is currently
exporting 30 mcm/d of gas to Turkey. Last year, Iran's gas exports to Turkey
totaled 8 bcm.
According to Petroleum
Ministry plans, annual exports to Turkey are to reach 70 bcm by 2021, up from
the current 10 bcm. Pipeline would handle 52 bcm and the rest would be in the
form of LNG.
Iraq Overtaking Turkey
Iran's gas exports to
Baghdad is set at 7 to 25 mcm/d. Iran started pumping gas to Baghdad via
Naftshahr in June and has so far delivered 1.2 bcm of gas to its neighbor. Two
border terminals in Naftshahr and Shalamcheh are designed to export natural gas
to Iraq. For that purpose, two pipelines which branch out from IGAT6 – one 231
kilometers long and one 141 kilometers long – have been designed and laid out.
Currently, 14 mcm/d of
gas is pumped from the Ilam and Kermanshah network to Baghdad power plants. Any
possible increase in this amount depends on domestic consumption.
As per Iran-Iraq gas
agreement, after the completion of IGAT6, gas export will start from 7 mcm/d
and could reach 35 mcm/d.
The Shalamcheh terminal
is planned to deliver gas to Basra. Like the Baghdad agreement, it can pump up
to 35 mcm/d of gas.
In the first year of
agreement, the National Iranian Gas Company (NIGC) would be required to export
7 mcm/d of gas to Iraq. Upon the request of the Iraqi side, this amount would
double in hot season.
Iraq plans to take
delivery of 20 bcm of gas a year from Iran. Gas exports to Iraq has already
begun and construction of infrastructure for gas export via Khorramshahr and
Shalamcheh is under way.
By signing two
agreements, Iraq would be importing 40 to 70 mcm/d of gas from Iran. Therefore,
it would overtake Turkey in gas imports from Iran.
Iran Gas to Europe?
Iran's priority for gas
exports must be its neighboring countries; however, negotiations have been held
in recent years for exporting gas to Europe.
By building up to 200
kilometers of pipeline, Iran would be able to pump gas to the Persian Gulf
states. Due to lower costs, shorter route and time, these countries must be
Iran's top priority due to profitability. But at the same time, gas exports to
Europe would be a factor for Iran to increase its share of global gas trading.
Natural gas accounts for 22-23% in the European Union's energy basket.
According to studies conducted by the European Parliament, 12 countries could
export gas to Europe. Among them Iran is the best potential supplier of gas.
Iran is able to export 25
bcm to 30 bcm a year of gas to Europe via eight routes. The Iran-Iraq-Syria,
Iran-Turkey with several options including Black Sea via Azerbaijan and
Georgia, and Armenia-Georgia-Black Sea are among these options. To that effect,
gas trunklines for gas delivery in big volumes and under high pressure are
among the NIGC plans. So far more than 9 pipelines have been laid out across
Meantime, in light of the
gas industry's plans to enhance its share of global trading, IGAT9 and IGAT11
are on the agenda to increase the capacity of gas transmission and exports.
1 mcm/d Gas Exports to
Last year, the Republic
of Azerbaijan and Nakhichevan signed a swap agreement, based on which Iran
received less than 1 mcm/d of gas from Astara for consumption. In return for the
gas, Iran would deliver an equal amount to Nakhichevan. Under such
circumstances, in exchange for every time of gas transmission, the parties to
the contract are factored. Therefore, this project would be profitable for Iran
and would establish a bilateral gas transaction.
If any problem occurred
in the Astara area or IGAT1, requiring overhaul, a source from Azerbaijan would
supply gas in order to prevent any disruption in the flow.
Saeed Takavoli, CEO of Iran's
Gas Transmission Company, says: "When we receive gas from a country under
swap we have no obligation to deliver the same received gas to
"For example, we
receive gas from Turkmenistan and consume it domestically, but we deliver an
equivalent amount to another country," he said.
Iran is currently
exporting 1 mcm/d of gas to Nakhichevan. Gas exports to Nakhichevan totaled 250
mcm during the first eight months of the Iranian calendar year which started on
March 21, 2017.
250 mcm Gas Exports to
Iran and Armenia signed a
20-year gas-for-electricity agreement in 2004. Under this agreement, Iran would
supply gas to Armenia as feed of its power plants and in return Iran would
receive electricity from Armenia. Armenia started importing gas from Iran in
Iran's Minister of
Petroleum Bijan Zangeneh recently said that Iran would raise its gas exports
level to Armenia from the current 1 mcm/d to 3 mcm/d by late 2018.
For a short period of
time when Armenia had problems with importing gas from Russia, Iran
exceptionally supplied 3 mcm/d of gas to Armenia as a neighborly gesture.
In return for each cubic
meter of gas, Iran imports 3kwh of electricity from Armenia, which currently
stands at 3.2 kwh.
According to Iran's
Ministry of Energy, Iran received 300 MW of electricity from Armenia and 150 MW
from the Republic of Azerbaijan last summer.
Based on Iran-Armenia
gas-for-electricity deal, 250 mcm of gas was exported to Armenia during the
first eight months of the current calendar year.
Iran pumps gas to Armenia
via a 110-kilometer pipeline stretching through Tabriz.
The CEO of Iranian Gas
Transmission Company has said that Iran exported 365 mcm of gas to Armenia in
the calendar year to March 2017. The pipeline can handle up to 2.3 bcm of gas
exports a year.
Gas exports, which are among priorities in
Iran's 6th Five-Year Economic Development Plan, have in recent years
been on the agenda of the Ministry of Petroleum.
Iran is currently in
contract with Turkey, Armenia, Azerbaijan, Turkmenistan and Pakistan in gas
exports, imports and swap. Furthermore, negotiations are under way with
Afghanistan, Oman, Kuwait and other Persian Gulf Arab states. Iran hopes to
partly realize its major objective of exporting gas to neighboring countries.
By increasing production from the South Pars gas field, Iran would have a
capacity to export 200 mcm/d of gas. Other enhancement projects would raise the
figure to 350 mcm/d.
Iran, which currently has
around 34 tcm of proven gas reserves, constitutes only 1.5 percent of global
gas trade. The figure is expected to change significantly thanks to plans and
prioritizations in the gas sector.
Courtesy of Iran Petroleum