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Iran's power export plan to Gulf States

Business Materials 3 September 2015 16:06 (UTC +04:00)
Iran is negotiating gas export to the Gulf States, including the United Arab Emirate
Iran's power export plan to Gulf States

Baku, Azerbaijan, Sept. 3

By Dalga Khatinoglu- Trend:

Iran is negotiating gas export to the Gulf States, including the United Arab Emirate.

Iran's Mehr News Agency reported Sept.2 that negotiations between Iran and the UAE have continued for a long time, though Iran's energy ministry avoids giving further information about the issue due to "criticisms by the Oil Ministry".

The criticisms refers to Iran's Oil Minister Bijan Namdar Zanganeh, speech last week when he said that exporting cheap power is a rival to gas export, because Iran's gas clients purchase the gas to convert to power.

Earlier, the Managing Director of Iran Power & Water Equipment and Services Export Company Bahman Salehi said Iran's peak power consumption level occurs in warm months, while during this time, Caucasus and Central Asian countries' power consumption declines. "Then Iran can become a power transit corridor in between northern and southern neighbors."

It's is not clear how Iran can transit power, while the distance between its northern and southern borders is 1800 km to above 2000 km.

Iran exported about 4.5 billion kWh and imported 1.8 billion kWh during the six months to late August. Iraq and Turkey share more than 90 percent of Iran's power export, while it's almost all gas import comes from Turkmenistan and Armenia. The power grid in Iran is connected to Afghanistan, Pakistan, Azerbaijan and the Nakhchivan Autonomous Republic as well.

Iran's power export to its southern neighbors is not a new story.

In 2011, Iranian MAPNA Group signed a $3.8 billion worth oil ministry to develop Forouz B gas field, aimed at feeding 28 million cubic meters per day (mcm/d) to a 3000-MW power plant, projected to be commence in four years.

Iran was negotiating with the UAE, Oman and Qatar to export 15 to 18 billion kWh of electricity to these countries, but none of the mentioned projects have started yet.

During these years, all of the mentioned Arab countries accelerated their power production capacity as well.

In the last five years, UAE's power production has experienced 12 percent annual growth while it's consumption growth pace stood at 8 percent per year. This country plans to become a major power exporter in coming years.

Oman commenced a huge power plant with 2000 MW output capacity in April. The country's power generation tripled from 2005 to 2015 and reached 7,600 MW, while it's peak power consumption is a little more than 5,100 MW.

Coming to Qatar, its power generation capacity doubled from 2009 to 2011, while the Qatar National Vision 2030 has stated its ambition to use non-hydrocarbon mechanisms for power generation.

In contrast, despite significant power production growth, Iran's electricity export plunged in 2015.

The reason is soaring domestic consumption, but during the post-sanctions era, it's expected the country's industrial sector will revive and the power needs will increase by 20 to 25 percent in this sphere.

Iran's industrial sector consumes about 35 percent of total electricity consumption, while this sector works at about 70 percent of capacity due to sanctions. According to the Energy Ministry, Iran's industrial sector consumed about 75 billion kWhs last year, indicating about 4 percent increase Y/Y, while the total consumption was 219 billion kWhs.

Edited by CN

Dalga Khatinoglu is an expert on Iran's energy sector, head of Trend Agency's Iran news service. Follow him on @dalgakhatinoglu

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