25 April 2022 - 14:28
  • News ID: 456065
Iran, an Influential Gas Exporter

TEHRAN (Shana) -- Gas production in Iran and supplying consumer and stakeholder needs inside and outside Iran has opened new horizons in the Iranian gas industry. To that effect, Iran has extensive plans in coming years to export gas to regional nations. A case in point is Iran’s gas swap deal with Turkmenistan and Azerbaijan, which is considered important by National Iranian Gas Company (NIGC). Majid Chegeni, CEO of NIGC, tells “Iran Petroleum” that a variety of scenarios are being planned for Iran to enhance its share of global gas trading with a view to getting a significant share in the world energy mix. 

The following is the full text of the interview Chegeni gave to “Iran Petroleum”:

What policies is NIGC pursuing within the 13th administration in the sectors of swap, exports and imports? What plans do you have for enhancing Iran’s share of global gas trade?

The 13th administration’s priority is to broaden trade with neighboring nations. In the first place, NIGC is trying to prepare the necessary ground for developing the trading natural gas and its products within the framework of diverse trade mechanism for its neighbors in light of their potential and needs. Therefore, when there is surplus gas outside Iran, we try to import it for consumption and then in exchange we can supply gas through various mechanisms including swap. In the meantime, other trade methods such as transit are also on the agenda, and since they have not been implemented yet, I will not talk about them.

To enhance Iran’s share in the world gas trade, plans have been designed in several sections. First, in the short term, the company seeks to remove barriers to trade in natural gas, both at home and abroad. For instance, the company has gone through the administrative process of accepting natural gas to be listed on the stock exchange, and natural gas will soon be offered on the stock exchange. At the same time, efforts have been made in the foreign sector to minimize existing problems with neighbors, including Turkmenistan, and to address non-trade barriers. Efforts have also been made to review current contracts with the maximum possible capacity and to review the requests of business partners with maximum understanding. In the medium term, the company is working to remove some commercial barriers, including infrastructure and hardware, by expanding existing pipelines and increasing its natural gas transmission capacity.

In the long run, the main plan is to supply as much gas as possible for export based on the development of production resources or to reduce gas consumption and optimize this valuable commodity.

The Iran-Azerbaijan-Turkmenistan gas swap deal settled five years of tension between Iran and Turkmenistan in the gas sector. Will this cooperation continue? Are you ready to increase the volume of gas swap and extend the term of the contract?

This 5-year contract, although it does not seem very large in terms of volume, is very important for NIGC, considering that it was able to create a new trade corridor south of the Caspian Sea. NIGC is ready to immediately upgrade this capacity to the maximum mechanical capacity of the existing pipelines, and in this regard, constructive negotiations have been held with Azerbaijan. However, NIGC is ready to cooperate with other neighbors in addition to Azerbaijan if the Turkmen side is willing and upgrades its infrastructure capacity. NIGC is also ready to accept foreign investment in the construction of a pipeline to carry gas from east to west or north to the south of the country within the framework of the transit mechanism.

Do you have any plans, in addition to gas exports, to export engineering services? Are you trying to provide necessary infrastructure for that purpose?

Since NIGC is a proprietor of technology in the design, operation and maintenance of gas facilities, in interaction with its partners, it introduces these capacities. For instance, the Iran Gas Transmission Company (IGTC) undertook to pig the pipeline carrying gas to Iraq. NIGC recently signed an MOU with a European country on technology diplomacy and exporting engineering services. But as far as commodities and related services are concerned, NIGC, through its negotiations with foreign partners, introduces local firms’ potential while making every effort to clear the way for their presence in foreign markets. But the fact is that what would transfer NIGC’s capabilities beyond Iran’s borders lies in their own capabilities. 

Khuzestan Province Gas Company has expressed its readiness to operate and launch gas supply infrastructure in Iraq’s border areas and some meetings have been held to that effect. But such activities require some modifications in the company’s Articles of Association. Have any plans been envisioned in the gas industry perspectives?

NIGC has a plan known as “gas export development based on provincial infrastructure”. Under this plan, eastern and western provinces including West Azarbaijan, East Azarbaijan, Kurdestan, Sistan and Baluchestan, and Khorasan Razavi have been active under the authority of NIGC’s International Affairs Division. Some meetings have been held and we are trying to come to conclusion. In Khuzestan, it is new and we are studying the issue. Regarding modifications to the Articles of Association, due to the complexities of natural gas trading contracts, all activities are concentrated at NIGC. Therefore, for the moment, there is no such plan on the agenda.

During the first days of your presence at NIGC, you held meetings with Iraqi energy official and Russian companies. Can we expect good news in international cooperation in the future?

Currently, meetings are regularly held at the level of experts and managers between NIGC and Iraqi and Russian partners on a variety of issues related to the natural gas industry trading, whose results will definitely be positive in the future.

At what stage is the renewal of contract for exporting gas to Turkey and Iraq?

Renewal of contract requires negotiations based on a precise assessment of market conditions on the part of the buyer and the seller both. The volatile conditions of the energy market put new challenges to assessments. However, NIGC experts have monitored energy market conditions in Iraq and Turkey prior to starting preliminary talks for contact renewal. We hope to reach conclusion in one year, particularly with regard to Iraq. Furthermore, negotiations with Turkey for contract renewal are much likely to be finalized by 2023.

Given the infrastructure and high potential of the gas industry, do you have any plans to enter other countries’ markets such as exporting LPG to Afghanistan?

Breaking into the natural gas and gas product market of neighboring countries requires upgrading infrastructure for energy transmission to these countries. Each country has its own unique case. Regarding Afghanistan, we are already exporting LPG to that country and we are ready to increase exports upon demand. 

Iran’s gas industry has taken steps towards local manufacturing, self-sufficiency and self-reliance in supplying parts and equipment. What percentage of this industry’s needs is supplied domestically? Has any roadmap been drawn for these activities?

NIGC has drawn up a comprehensive self-sufficiency plan for the domestic manufacturing of strategically needed items and equipment required by the gas industry. As the first step in this regard, NIGC held the first event on the development of technology in the gas industry for largely-used items in December 2019 with a view to completing the link of technological development and local manufacturing of strategic equipment for the purpose of supporting domestic manufacturing and startups and knowledge-based companies. A package of prioritized demand (comprising 29 basic commodities and technology items) was presented to startups, knowledge-based and technological companies so that during a three-year period, necessary items would be manufactured domestically and more than € 250 million would be saved. For this purpose, NIGC has signed agreements with 24 knowledge-based companies for the local manufacturing of commodities and equipment, which are being produced for the first time in the country. Knowledge-based companies are being supported through technology development and local manufacturing through signing contracts, developing technology through cooperation with parks of science and technology. Although there are many achievements in this field, development of technical knowledge and construction of testing and applied research devices, upgrading national turbines, upgrading national compressors, upgrading and installation of monitoring systems of pressure boosting facilities are just some of the achievements of these institutes.

Underground Storage facilities are a strategic infrastructure in all countries. In the gas sector, 2 storage sites have been put into operation so far. What’s the perspective in this sector?

Existing underground gas storages are Sarajeh with a storage capacity of 1 bcm and Shourijeh D with a storage capacity of 2.25 bcm. Underground storage facilities are under development in the second phase of Shourijeh with a storage capacity of 2.25 bcm and Shourijeh D with a storage capacity of 0.5 bcm. The second phase of Sarajeh with a total volume of 2.75 bcm is under development. Meanwhile, converting Ghezel Tappeh, Nasrabad, Bankol, Baba Qir and Mokhtar into storage sites are under study. The Sarajeh and Shourijeh storage capacity will increase from 3.25 bcm to 6 bcm by 2026. On the other hand, the volume of recoverable gas from these storage sites in the cold months of 2026 would increase to 55 bcm.

By Mahnaz Mohammad-Qoli

Courtesy of Iran Petroleum

News ID 456065


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