Silent endeavor by the Petroleum Ministry in realizing oil revenue from energy exports does not allow it to release official information about energy market. But observers believe that despite tougher ever sanctions targeting its oil, gas and petroleum products, Iran has managed to find a way out in the face of US-led economic war in a bid to make acceptable revenue from exports.

Creation of an industrial civilization in the strategic coasts of the Persian Gulf and heavy investment in the world’s largest gas reservoir despite rounds of sanctions has further intertwined South Pars with national economy. That has given rise to a special status to Iran’s political, economic and international standing amid unwelcomed sanctions.

This article seeks to discover the new footprints of South Pars stakeholders outside Iran’s territory and offer a small introduction to the vital role of Iran’s energy exports under the aegis of South Pars development.

Gas Exports Grow 93%

Recovery rate from the world’s largest independent gas reservoir has reduced Iran’s dependence on gas imports from neighboring nations. Apart from that, it has cleared the way for enhanced exports owing to increased production from the South Pars field. Iran is exporting gas to Turkey and Iraq. Both have won US sanctions waivers. Iraq is OPEC’s second largest oil producer, but it depends on Iran’s gas to feed its power plants to generate electricity. Iran is also drawing up a plan to export gas to Afghanistan. This project would be handled by the private sector.

Iran exported 17.4 bcm of gas to neighboring nations last calendar year, up from 9 bcm in the calendar year to March 2014. That indicates over 93% growth in seven years.

Apart from supplying household, industrial and power plant gas needs, National Iranian Gas Company (NIGC) has announced that it is exporting on average 70 mcm/d of gas to neighboring nations. The figure is far from objectives set out in Iran’s 6th Five-Year Economic Development Plan due to historic US sanctions and lack of cooperation on the part of Iran’s rivals, it remains a significant achievement.

Feeding Gas to Power Plants

Over recent years, due to climate change, water shortages and subsequently the low-profile of hydraulic dams in power generation, the number of thermal and combined cycle power plants has increased owing to increased gas production from South Pars. Currently, natural gas claims the top spot in supplying feedstock to power plants in the country. More than 90% of Iran’s power generation is being done by thermal power plants which are fed by natural gas.

One may wonder how gas supply to power plants would contribute to increasing Iran’s energy exports. The most significant achievement of increased power generation in the country would be the possibility of electricity exports to neighboring nations and providing the ground for establishing a regional hub of electricity among neighboring states.

A review of Iran’s electricity exports status shows that statistically speaking, Iraq, Afghanistan and Pakistan remain the main destinations. Iran is also exporting electricity to Armenia, Republic of Azerbaijan and the Autonomous Republic of Nakhichevan. Therefore, increased gas production from South Pars would indirectly contribute to higher electricity supply to neighboring nations.

Meantime, increased gas supply to power plants in recent years, has reduced the share of liquid fossil fuels (gasoil and fuel oil) in the power plants’ energy mix from 43% in 2013 to 10%, now. Add to that less environmental pollution and the possibility of exporting gasoil and fuel oil.

CEO of NIGC Hassan Montazer Torbati has said that gas supply to power plants since 2013 has saved the country $75 billion.

“Without a 2.5-fold increase in the South Pars gas production over this period of time, at least 150 billion liters of liquid fuel would have to be consumed by power plants. Therefore, by increasing gas supply to power plants, $75 billion was saved and Iran turned from an importer of petroleum products to an exporter of such products,” he said.

Gasoline Exporters Club

With the construction of the giant Persian Gulf Star condensate refinery that supplies 40% of Iran’s gasoline needs, the condensate recovered at South Pars is integrated into the value-generating cycle. A major buyer of the oil products is Venezuela. Iran used to be an importer of gasoline to meet its daily needs. Now it has joined gasoline exporters’ club, and Iran’s refining industry is now credited with exports.

With 25 operational refining phases in Assaluyeh and Kangan, the South Pars Gas Complex is supplying 780,000 b/d of gas condensate, thereby delivering significant amounts of feedstock to the refining facility.

Currently, in light of a sharp decline in the number of travels following the outbreak of the coronavirus, gasoline consumption has fallen to an average 70 ml/d. Iran’s gasoline production capacity stands at 110 ml/d and therefore 40 ml/d is now extra, which Iran can export by land or by sea.

The director of the Persian Gulf Star refinery has announced that marketing activities for selling refined petroleum products in East Asia have increased. The refinery exported more than 800,000 metric tons of four products – light naphtha, intermediate naphtha, heavy fraction and solvent 402 – in the first half of the current calendar year to 21 March 2021. It was up 120% year-on-year.

2nd, 3rd Petchem Jump

The network of South Pars products’ buyers does not end here. Midstream and downstream industries, particularly petrochemicals fed with gas condensate, natural gas, ethane and LPG, have been instrumental in the development of this energy hub in the heart of the Persian Gulf.

Iran’s petrochemical industry, as a value-generating industry, has been instrumental in earning Iran hard currency in the nonoil exports sector. Thanks to South Pars gas, the petrochemical industry is now endowed with a competitive privilege compared with regional and world nations.

This industry owes its life and demise to feeding petrochemical plants. Undoubtedly, an increase in the production capacity of gas and other products from South Pars has been instrumental in drawing a roadmap for the petrochemical industry with a view to the realization of the 2nd and 3rd jumps in the petrochemical industry by 2025. That is why a large number of petrochemical projects have been launched over years.

Iran is determined to complete and launch 27 petrochemical projects with an investment of $17 billion to bring the number of petrochemical plants to 83, which would be fed with 62 million tonnes of crude oil a year, or 1.4 mb/d. Therefore, Iran’s petrochemical industry would reach an output capacity of 100 million tonnes a year with an investment of $70 billion. The products will be worth more than $25 billion.

Therefore, despite all economic problems Iran is dealing with due to sanctions, the country has seen a historic jump in petrochemical production. This sector has served Iran a powerful tool in dealing with sanctions and earned Iran hard currency.

The CEO of National Petrochemical Company has said Iran would earn a record $25 billion from the petrochemical sector by next calendar year. The figure would reach $34 billion following the 2nd and 3rd jumps.

South Pars with a record of less than four decades has been instrumental either directly or indirectly in helping the country achieve its transnational interests.

Courtesy of Iran Petroleum

by Sahar Saeedian