2 February 2021 - 14:50
  • News Code: 313087
Iran Raises Gas Exports Despite Covid-19, Sanctions

Iran’s President Hassan Rouhani has said that the gas industry would be the legacy of his two-time administration for his successor who would be elected next year. Gas exports have doubled since 2013 when his first administration took office.

Minister of Petroleum Bijan Zangeneh has said that Iran would see its exports reach 15-16 bcm in the current calendar year. Hassan Montazer Torbati, CEO of National Iranian Gas Company (NIGC), recently said Iran’s gas exports to neighboring states had increased 2% year-on-year.

Iran ranks the second after Russia in terms of gas reserves with 33tcm of recoverable gas. Meantime, Iran’s enhanced gas recovery from the giant offshore South Pars gas field which it shares with Qatar has further assured Iran about supplying domestic gas needs and planning for gas export.

Iran’s gas production capacity currently stands at 880 mcm/d and would reach 1 bcm/d by March 2020. South Pars, whose output has grown 420 mcm/d in seven years, supplies 700 mcm/d.

“In light of Iran sitting atop recoverable gas reserves of about 33 tcm and total annual production of 0.3 tcm, the current gas reserves would be enough to supply national needs for 50 years and the country would face no crisis in terms of gas production and supply. Furthermore, future gas discoveries would strengthen Iran in supplying fresh needs,” National Iranian Oil Company (NIOC) said in a statement.

Without South Pars development in the past seven years despite all restrictions faced with by the petroleum industry, domestic gas supply would have been now a major challenge for the Petroleum Ministry, not to mention gas exports. However, thanks to capacity building in recent years, Iran has ended its gas imports from Turkmenistan and is now able to deal with any increased gas consumption in the country.

For coming winter, 820 mcm/d of gas is forecast to be fed into the national trunkline. It would include 600 mcm for consumption at households and 70 mcm/d destined for exports. It is noteworthy that Iran is currently producing 700 mcm/d of sweet gas, 300 mcm/d of which is used in the household sector. But the figure is set to rise as temperature falls in most parts of Iran in winter. To deal with this problem, NIGC officials are now finding ways to fill household needs because 97% of Iranian households are connected to the national gas grid.

After the US withdrew from Iran nuclear deal in 2018 and re-imposed oil sanctions on the country, Iran’s petroleum industry faced numerous challenges. Add to them the coronavirus pandemic.

Despite all challenges, Iran is still exporting gas to neighboring countries. The performance of Iran’s gas exports shows that the figure has doubled since 2013.

Minister Zangeneh recently said that Iran’s gas exports had reached a record 80 mcm/d. The figure takes up added significance when we see that Iran-Pakistan gas pipeline has not been fully built due to sanctions and pressure by other nations.

What countries are Iran’s gas buyers? 

Gas Exports Deal Extension

Iran started supplying gas to Turkey in 2001 under a 25-year deal. Under the terms of the agreement, Turkey receives at least 8.5 bcm of gas a year from Iran. In early April, the flow of gas from Iran to Turkey stopped following a blast at the pipeline.

Turkey needs to import 130 mcm/d of gas, supplying its needs mainly from Russia and then Iran and Azerbaijan.  

Iran-Turkey gas deal would expire in 2026. Iranian officials have already embarked on talks to negotiate extension of the deal with Turkish officials. The talks are currently held online due to the coronavirus pandemic.

Montazer Torbati said, in his talks with Turkish officials, he had expressed Iran’s willingness for the extension of the agreement.

No official date has been set for talks about extending the agreement. But Iran hopes to extend the agreement.

Readiness for Exports

Iran embarked on talks for exporting gas to Pakistan during the second administration of Mohammad Khatami. The talks bore fruit under the administration of President Mahmoud Ahmadinejad. The agreement for the “peace pipeline” to carry gas from Iran to India while cutting through Pakistan was to be signed in 2007, but finally an agreement was signed in 2009 between Iranian and Pakistani presidents. The two countries agreed on 1,100 km of pipeline in Iran’s territory and 1,000 km in Pakistan’s for the delivery of 60 mcm/d of gas from South Pars. Iran completed its own part, but Pakistan failed to fulfil its obligations due to pressure from the US and Saudi Arabia, coupled with undesirable economic conditions in Pakistan.

Minister Zangeneh said Iran had expressed its readiness to export gas to Pakistan, “but they are not buying gas from Iran”.

On the issue of Iran’s gas exports to Pakistan, Montazer Torbati said: “This issue is still being followed up on, legally and diplomatically. We have not yet agreed on referring the case to arbitration. We hope that these exports would materialize. Meantime, we are ready to export gas to this country.”

Increased Gas Exports to Iraq

Iran’s Petroleum Ministry signed an agreement with Iraq, based on which natural gas delivery began in 2017. Iran raised the volume of its gas exports to Iraq in 2018. Despite political and economic pressure from the US in the new round of sanctions, Iraq’s gas imports from Iran have not declined; rather the relevant volume has increased. Iran is currently exporting on average 50 mcm/d of gas to Iraq via two pipelines, one carrying 35 mcm/d to Baghdad and one carrying 15 mcm/d to Basra.

It is also noteworthy that commissioning Iran Gas Trunkline-6 (IGAT-6) and IGAT-9 in southwestern and western Iran has helped increase gas exports volume to Iraq.

As US sanctions intensify on Iran, Iraq is the only country to have won waiver in order to meet its growing electricity needs. Therefore, Iran’s gas exports to Iraq continue. Iran’s Petroleum Ministry hopes to increase gas exports to Iraq.

Montazer Torbati said: “Iraq has called for increasing gas imports from Iran, but they are now under the US pressure and they have to obtain waiver.”

“We are ready to increase gas exports volume to Iraq,” he added.

Azerbaijan and Iran are also buyers of Iran’s gas, albeit in small volumes. Iran exports gas to Armenia in return for electricity, while Azerbaijan swaps Iran’s gas for final delivery to the autonomous Republic of Nakhichevan.

Courtesy of Iran Petroleum

News Code 313087

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