As key players in gas consumption management, operator companies can significantly contribute to reducing energy use and increasing efficiency by using competitive mechanisms and advanced technologies. These companies can shift consumption from low-tariff to high-tariff or production sectors, and by implementing energy-saving projects, they not only create economic incentives but also help improve overall gas consumption patterns.

To explain the role and participation of operator companies in gas management, the Oil and Energy Information Network (Shana) held a meeting with Ali-Asghar Rajabi, Energy and Carbon Manager at the National Iranian Gas Company (NIGC), and Sajed Kashfi, Deputy Director of Gas Consumption Optimization at NIGC. The second part of the discussion focused on enforcement mechanisms, models for measuring gas savings at CGS (city gate station) facilities, pilot phases, and the creation of digital systems to attract investment from operator companies. The model shows how such initiatives can enhance energy efficiency across the country.

How is cooperation with operator companies structured, and what measures prevent the creation of rent-seeking opportunities?

Kashfi:

In the natural gas retail model, operator companies enter a competitive process at the Energy Exchange to purchase gas from the National Iranian Gas Company. In addition, a base tariff is defined for each company based on the consumption share downstream of a CGS station (city gate pressure reduction station).

For example, if an operator selects a CGS station to manage downstream consumers, the consumption share from the same month in the previous year serves as the baseline. Suppose 30% of consumption at a CGS station belongs to the residential sector, 20% to power plants, and 50% to industry. The base tariff is calculated as the weighted average of the current tariffs for each category. Operator companies then compete on this price through the Energy Exchange. Once a price is discovered and a transaction finalized between NIGC and the operator, the operator sells gas to consumers at the government-approved tariffs.

 How do operator companies profit from these investments?

Kashfi:

Operator companies generate profits through two mechanisms: first, by shifting consumption from low-tariff to higher-tariff or production sectors; and second, through verified energy savings at CGS stations, certified as “energy saving certificates” tradable on the Energy Exchange. This transparent and competitive structure prevents rent-seeking and channels economic incentives toward energy optimization and efficiency improvements.

 What ensures the implementation of the new operator company model?

Kashfi:

In the past, outsourcing initiatives within NIGC involved contractors handling routine provincial gas company operations in exchange for a commission on gas sales. However, since they also managed sales and infrastructure, the desired goals were not fully achieved.

In the new model, roles and responsibilities are clearly separated. Operator companies that enter as retailers simply purchase gas from NIGC and supply it to consumers—they are not responsible for maintenance, repairs, or infrastructure. This separation reduces operational risks and allows operators to focus solely on optimizing consumption and managing energy use.

If the model proves successful, certain infrastructure responsibilities may gradually be delegated to operator companies in the future, serving as both an enforcement guarantee and a performance incentive.

Rajabi:

To clarify, consider the brickmaking industry. Iran produces about 65 million tons of bricks annually. In the traditional method, about 300 cubic meters of gas are consumed per ton of bricks, requiring continuous furnace operation for four days.

If an operator company upgrades this process to Hoffmann technology, consumption drops to about 150 cubic meters per ton—still over four days. But converting the same furnace to a tunnel kiln—a modern technology developed by an Iranian knowledge-based company—reduces consumption to about 90 cubic meters per ton in just 45 minutes. In the roller kiln method, consumption drops even further, to roughly 27.4 cubic meters per ton.

Thus, with tunnel or roller methods, Hoffmann furnaces are effectively phased out. The difference between 150 cubic meters (Hoffmann) and 27.4 cubic meters (roller) represents actual savings, which the operator captures. The saved gas can then be sold to higher-tariff industries like petrochemicals, allowing the operator to recover its investment through the price differential. As a result, the operator profits, national energy use drops sharply, and efficiency rises.

 Is gas reduction measured at the CGS station?

Rajabi:

Two models have been defined for operator activity. In the first model, the basis is the CGS station, where consumption reduction is measured from that point. The baseline consumption of the station is determined, and the operator’s performance is evaluated by how much consumption decreases compared to that baseline.

In the second model, the operator interacts directly with consumers—residential or industrial—and savings are calculated based on average consumption from the past three years. In this case, measurements are made at consumer meters. In both models, the use of smart control systems and digital platforms is mandatory to record, monitor, and verify data continuously.

 Given this structure, how accurate can measurement be?

Rajabi:

The system is designed for precision. Suppose a city has only one shared meter at the CGS point. Regardless of how consumption is distributed among residential, industrial, or petrochemical users, the total citywide consumption serves as the measurement basis.

If the operator shifts consumption from residential users to industrial or petrochemical sectors, the total remains traceable at the city level. Three scenarios may occur:

1. Consumption matches the baseline – the operator must still meet minimum obligations regarding customer coverage and expected demand growth.

2. Consumption falls below the baseline – the operator has achieved savings and load shifting, earning a credit or “certificate” for the saved gas.

3. Consumption exceeds the baseline – the operator has failed to meet its obligations.

At a smaller scale, if the operator focuses on an individual industrial unit or even a household, measurement devices are installed at the regulator or consumer meter, supported by smart control systems to ensure real-time monitoring and accurate data capture.

 If a company starts today, when can practical results be seen?

Rajabi:

Any project requires continuous improvement and a staged implementation process. The pathway is designed step by step. The first phase is a pilot project. Last year, a pilot was launched in Ardakan, Yazd Province, and its results were reviewed. Based on that experience, we submitted proposals to the government, received the necessary approvals, and developed an executive bylaw.

The second phase involved completing the legal and regulatory framework. The third phase is the launch of implementation in seven selected provinces to test and refine the model at a larger scale.

The fourth phase focuses on establishing a digital data network and monitoring infrastructure for continuous tracking and analysis. With accurate data observation, we can expand implementation step by step.

Therefore, if a company enters the process today, tangible results will begin to appear within the first year, with more visible impacts emerging over subsequent years as data systems mature and network coverage expands.

 Are there interested companies, and what types can participate?

Rajabi:

A formal public call for operator participation has not yet been issued, but knowledge-based companies and major producers have expressed strong interest and are actively involved in pilot projects. We’ve received numerous inquiries from firms in the petrochemical, steel, and other heavy industries, reflecting their willingness to join.

Smaller companies with innovative technologies or limited capital can also participate under the second model, focusing on consumption optimization at the consumer level. Under the bylaw, large industrial companies may also act as operators themselves.

For example, a major petrochemical holding could implement gas-saving projects and manage the saved gas within the same city of operation under the CGS-based model. Smaller or knowledge-based firms without large capital resources could participate through the consumer-based model. In both cases, companies can formally join the program after qualification and licensing.

 Will there be an official call for participation?

Kashfi:

Yes. After the oil minister’s approval, an official call for participation will be published within 20 days. The text is already prepared and will be provided to interested companies so they can submit their qualifications and supporting documents within the designated timeframe.

During the pilot phase, requirements will be applied with some flexibility. However, in subsequent full-scale stages, stricter evaluations and compliance measures will be enforced to ensure integrity and effectiveness of the model.

By Mojgan Faraji