Iran's Natural Gas Exports Mandate U.S. LNG Support
Since Iran is the “largest state sponsor of terrorism in the world,” the above headlines mandate
required public and legislative support for U.S. exports of liquefied natural gas. Iran’s natural gas
industry has been hampered by U.S. and European-led sanctions that have restricted the flow of
foreign direct investment and the transfer of technology, but Iran is swimming in natural gas and
wants to make a splash on the international export stage.
As Western sanctions are lifted, Iran seeks to become a major player in the rapidly globalizing gas
market. Today, traded gas accounts for a rising 30% of all use and will expand in volume by 30% by
2025. Gas will be the primary fuel under COP 21 set last November (here), and annual global
demand is rising by 6-8 Bcf/day. Iran produces around 6 Tcf per year, and consumption has been just
under that. Production will reach over 10 Tcf by 2030 (here). “Iran has a high success rate of natural
gas exploration, which is estimated at 79% compared to the world average success rate of 30% to
35%.”
Despite Western sanctions, Iran’s natural gas production continues to grow as more phases of
its largest natural gas field, South Pars, come online. In all, the field Iran shares with neighboring
Qatar is being developed in 24 phases. About half of the phases have been completed, and
Iran hopes the field, including those centered on oil, will be fully operational in 2018. Located over
60 miles offshore, South Pars holds nearly 40% of Iran’s gas reserves.
Iran contributes just 1% to the total global natural gas trade, with almost 90% of exports going to
Turkey. But, a huge buildout in infrastructure means that India, Pakistan, Kuwait, and UAE could all
become targets for Iran’s gas. And planned reductions in subsidized pricing, which will help
reduce wasteful usage, will free up more of Iran’s gas for exports.
More significantly, Iran is currently working on several options to join the same “international LNG
club” that the U.S. is also joining. And Europe is the mid- and long-term target. Europe’s gas demand
is projected to increase 15-20% by 2025. This means that Iranis competition for the U.S.: “More
Than Half of U.S. LNG Is Destined for Europe.” Iran’s goal to start LNG shipments by 2018 is unlikely,
but post-2020 is indeed realistic. Importantly, this is when most a new wave of LNG projects and
demand will be coming online (here).
Thus, the importance of this story to the U.S. is very clear. In a world where gas consumption will
jump by nearly 40% to over 470 Bcf/day by 2030, the Iranian gas export buildout confirms why we
must continually support our own energy exports and connections with North American allies and
heavily resourced Canada and Mexico. Anything else would be un-civilized.
Iran Leads In Natural Gas Reserves
