Iran has, over the past year, taken a series of measures to curb increased domestic consumption and guarantee gas distribution stability. These measures include following up on the implementation of a package for the development of 11 gas fields administered by the Iran Central Oil Fields Company (ICOFC), second-phase development of the Aghar field and construction of a gas compressor station for the Sarkhoun field, 4% increase in rich gas recovery from the South Pars gas field, increasing domestic gas supply by 70% with the operation of new phases of South Pars, natural gas output exceeding 1 bcm/d for the first time, and following up on the SP11 development. 

The consumption of natural gas in Iran saw a 3.2% growth in 2021 compared to the previous year, and the total consumption of natural gas in Iran reached 241.1 bcm in 2021. Therefore, the growth of natural gas consumption in Iran during this year has been higher than the growth of production. Last year, Iran consumed 234.3 bcm of gas. The 10-year average growth of natural gas consumption in Iran was 4.6% per year between years2011 and 2021.

Globally, 4037.5 bcm of natural gas will be consumed in 2021, which is a 5.3% growth compared to the previous year. The Iranians have consumed 6% of the world's total gas consumption this year and are known as the fourth largest gas consumers in the world this year.

17.3 bcm Gas Consumed in 2021

In its recent report, BP announced that in 2021 the total global trade of natural gas through pipeline was 704.4 bcm, of which only 2.4% was Iran’s share. Despite the fact that Iran has a share of 6.4% of total natural gas production in the world, due to high domestic consumption, it has only been able to capture a 2.4% share of the global gas market.

Iran’s total natural gas export in 2021 has been calculated to be 17.3 bcm, of which 9.1 bcm was exported to Turkey and 7.7 bcm to Iraq. Half a bcm of Iran's gas exports was also destined to CIS countries.

Gas Output Capacity Hits 1bcm/d

Iran’s natural gas production capacity exceeded 1 bcm/d for the first time last calendar year with recovery from the giant South Pars gas field up 4% year-on-year.

Iran has set the agenda to focus on the development of the South Pars gas field, take the necessary measures and use all available capacities to increase the production of rich gas from this common gas field, and in line with this, by operating the phases of the South Pars gas field, the volume of Iran’srich gas production has surpassed that of Qatar despite the country's double share of this joint gas field.

Currently, development of SP11 is underway, and initial production from this phase is expected to start in the current calendar year. The project had 34% physical progress last calendar year.

The average production of rich gas from the joint South Pars gas field has experienced a significant increase over recent years. It reached a record 705 mcm/d last January.

South Pars, Key Economic Driver

The development of the phases of the South Pars gas field disrupted many equations and assumptions of the tightening of US sanctions against Iran’s oil industry, so that Iran's oil and gas industries were able to overcome many challenges facing the export of energy resources, and by diversifying in this sector and selling the products obtained from the refining of oil, gas and related products will make the passage through the embargo bottleneck smoother.

The increase in gas extraction from the world's largest independent gas reservoir is not only due to Iran's dependence on gas imports from the neighboring country, but also caused the development of exports in this area with the support of the hike in production capacity from South Pars.

Today, in western Iran, gas is exported to Turkey and Iraq, due to US sanctions waiver. As the second largest producer of OPEC oil, Iraq relies on Iranian gas to generate electricity for a number of its power plants. Also, Iran is developing a plan to export Iranian gas to Afghanistan, which is carried out by the private sector.

Iran's gas exports to neighboring countries reached 17.4 bcm last calendar year. The figure was about 9 bcm in 2013, which shows that gas exports have grown by more than 93% in the last seven years. According to National Iranian Gas Company (NIGC), in addition to the supply of domestic gas, industries, power plants, etc., 70 mcm/d of gas is currently exported to neighboring countries on average, which, is a big achievement despite some negative measures by rivals.

Neighbors Prioritized

The Petroleum Ministry’splan for gas export is to focus on cooperation with neighbors. He believes that we have so much opportunity among our neighbors that Europe is our next priority, of course, if the Europeans are interested, we may negotiate to meet their needs. However, it requires that Europeans vote independently and not follow America.

While the price of gas in world markets has been constantly increasing over recent years, Iran's share of gas exports is only less than 2%, and due to the increase in gas supply in Iran's provinces and on the other hand, the drop in natural production in gas reservoirs like South Pars, within 4 years, it seems that in order to achieve the export goals in the development vision plan, we should think of optimizing gas consumption inside the country at the same time as developing new gas fields.

Therefore, in addition to the full development of South Pars and using pressure compressor platforms in this field, in the long term, we must also develop other fields such as North Pars, Ferdowsi and Farzad in order to increase the gas production capacity of the country, while also pursuing the efficient use policy. We must increase production to the extent to be present in the market as the first holder of gas reserves in the world, just as Russia has a strong presence in the European market and uses the capacity of diplomatic relations and imposes its political sovereignty on countries. We need to seriously enter the markets of our neighbors, especially the Persian Gulf, because if they are dependent on energy, diplomatic relations will take a different form and this will be a good tool in our hands.

The geographical position of Iran is different compared to other gas producers in the world, we have 15 neighbors, minus Russia, Azerbaijan and Turkmenistan. They all need our gas. For instance, despite the fact that Turkey has diversified its market and has a pipeline from Russia and even from the joint Iran-Azerbaijan Shah Deniz field in the Caspian Sea, and transits the gas received from these two countries to Europe, it still needs Iran’s gas. Iraq is also our customer. Although it has signed a $27 billion contract with Totalenergies to reduce its dependence on Iran’s gas, it still needs Iran’s gas in order to inject water and gas into its oil fields for enhanced recovery.

On the other hand, the southern Persian Gulf neighbors need more of our gas. Some experts consider them to be the best customers and the thirstiest for Iran's gas, because the peak consumption of these countries is in the summer, so we can always have a balance of consumption and manage the peak consumption of these countries in such a way as to continuously supply the gas they need.

Reliable global sources such as BP have always declared that Iran has the highest gas reserves in the world, therefore it is natural to expect that Iran be, at least on paper, the world’s most important exporter and occupy a significant share of the world market. However, in practice, it has only two percent of this market due to US sanctions that have halted Iran’s exports and barred others from investing in Iran.

Gas Exports

NIGC has been seriously following up on gas exports as a priority set out in the 6th National Development Plan over the past four years by increasing recovery from South Pars.

The energy and gas market processes have undergone tremendous changes. The first change is the price change, which is now normalized. In the past, the price of gas in Asia was $20, in Europe it was $12, while now these prices have reached $6 and $4, respectively, and therefore, the price has been normalized. Meantime, new suppliers like the US have emerged. This is despite the fact that this country was one of the world's largest importers until 2005, and now the country's gas shipments have even reached the Persian Gulf, as well as other countries such as Australia.

These new players have created a new dynamic in the market. Or the new actors have changed not only in the export sector but also in the import sector, for example, Japan is currently the largest importer in the world, but in the next few years it will not be anymore and will become a fourth-rate player in the import sector.

Unfortunately, due to the sharp increase in consumption and non-compliance with the consumption pattern in Iran, the rate of gas production and consumption has become almost the same and it will take several years for Iran to increase its gas trade and export balance, but there are different ways to cooperate with neighboring countries. In the same situation, there is also gas export, including buying gas from neighbors, transferring and selling it to other neighbors or other countries, transferring neighbors' gas from Iran to the desired destinations by receiving the right of passage (transit).

Natural gas production in Iran has always been on an upward trend since 2011, and the US sanctions against Iran have not been able to stop or reverse the growth of gas production in Iran. During these years, natural gas production in Iran has grown by an average of 5.4% annually, which is more than twice the global average growth. The world’s natural gas production has grown by an average of 2.2% per year during this period.

In 2021, Iran's natural gas production grew by 3.1 percent compared to the previous year and has increased from 249.5 bcm in 2020 to 256.7 bcm.

Transit and Swap Capacity

The country’s gas transmission network is a flexible network whose transmission capacity is a function of the natural gas consumer and producer. Therefore, according to the production and development of transmission lines, the amount of sweet gas transmission in its maximum state is forecast to reach 881 mcm/d in the current calendar year.

According to the latest available reports, the average daily gas transmission in the first three months of this year was 700 mcm, which is a significant indicator for the efficiency of the transmission network in the spring. In the first three months of this year, 65 bcm of natural gas was transmitted via the network.

Courtesy of Iran Petroleum