Iran eyes major gas export boost, but doubts mount
Finally freed from international sanctions against its energy sector, Iran is working quickly to raise it
natural gas production and export capacity — and its medium-term targets are truly ambitious.
If realized, Tehran’s plans for a major gas export increase could send tremors through global gas
markets.
But analysts and industry observers have already raised major doubts on Iran’s ability to meet its
targets, especially given the difficulties in financing projects, competition across global gas markets and
the doggedly low-price environment.
A senior official at the state-owned National Iranian Gas Company (NIGC) said this month Iran wanted to
raise its gas exports to some 350 million cu m/d — the equivalent of a massive 128 Bcm/year —JX KˉcҺmumD}89ױ@gk\;2P5&00G`zr:
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Azizollah Ramazani, NIGC director of international affairs, told the Iranian energy ministry news agency
Shana that NIGC was planning to export gas to 15 countries in the coming years, including Europe, via
pipeline or as LNG.
“We need more investments in order to gain a firm toehold in the LNG market and win more share in
the international markets,” he said.
Iran currently produces around 250 Bcm/year of gas, according to Iranian officials, most of which is
consumed domestically.
Iran’s exports are currently limited to around 10 Bcm/year to Turkey and small volumes to Azerbaijan.
But that could be about to change.
EXPORT PACTS
According to Iran’s latest development plan for 2016-2020, it aims to boost gas production to 360
Bcm/year by 2020, which in tandem with efforts to curb domestic consumption would free up the
necessary vast volumes for export.
Iran already has deals in place to supply gas to some of its immediate neighbors, including Iraq, Oman
and Pakistan, while Tehran is also engaged in talks to supply gas to other countries in the region such as
Afghanistan and Kuwait.
NIGC also has ambitions to export to countries including India and China.
But analysts remain doubtful that Iran will become a major exporter, especially to Europe.
Jonathan Stern, leading gas analyst from the Oxford Institute of Energy Studies, told Platts he did not
expect any Iranian gas supplies to Europe in the next ten years.
“First they would need spare gas which they don’t have, second they would need to accept the price
situation in Europe which they are not likely to, and third capacity would need to be created and buyers
found,” Stern said.
“If there are going to be additional gas exports from Iran in the next 10 years — which I rather doubt —
they would logically go to Pakistan, Iraq and Oman with which NIOC/NIGC have contracts,” he said.
John Feddersen of energy consultancy Aurora agreed with Stern’s assessment.
“Pipeline economics to Europe don’t work,” Feddersen said at last week’s Flame conference in
Amsterdam.
“We don’t really see it as viable for a commercial pipeline to be built in such an oversupplied market,”
he said.
Iranian LNG projects will take time too — Stern sees first LNG as being exported after 2026 at the
earliest — and LNG might also find it difficult to compete in the global market place.
On the European market, Iran would not be able to compete with US LNG, “which will have the cost
advantage,” Feddersen said.
Only in Asia could Iran find a marketplace, but even then it’s likely to be a longer-term opportunity post-
2025 when demand for LNG is likely to see a tightening market.
“We don’t think it’s going to have an impact on the global gas market,” he said, suggesting exports
would at most reach 35 Bcm/year by 2035, well short of Iran’s stated aims.
QATAR COMPETITION?
Now free of sanctions, Iran wants to press on with the development of South Pars — which it shares
with Qatar whose part it calls the North Field.
But might Qatar lift its 11-year moratorium on the further development of its part of the field in part to
scupper Iranian plans to boost production?
And could efforts by both countries to extract gas at full blast be to the detriment of the reservoir?
Aurora analyst Marc Hedin told Platts he expected there to be a spirit of cooperation between Iran and
Qatar on the further development of the shared resource.
He said Qatar would be well aware of Iran’s plans around South Pars. “Do Iran’s energy ambitions play
into Qatar’s decision-making processes around the North Field? Absolutely.”
He said Doha had been cautious about its own NorthField gas deveopment. “Qatar{*oU?6r7n a lot
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