BAKU, Azerbaijan, October 8. Amidst tough international sanctions, gas exports remain Iran's lifeline for obtaining U.S. dollars, Alexandre Araman, Director for Middle East Upstream at Wood Mackenzie, told Trend.
As the analyst commented on the new gas swap deal between Turkmenistan, Iran and Iraq, he pointed out that it is an effective way for Baghdad to diversify its gas supply through a three-way swap agreement involving Tehran.
"Despite being the world's fourth biggest oil producer, domestic gas demand in Iraq is not being met. Baghdad imports around 1 bcfd of expensive Iranian gas imports for its power sector while flaring large quantities of associated gas. However, Iraq has struggled to pay for this supply due to international sanctions against Iran. Purchasing Turkmen gas instead of Iranian gas should resolve this problem. We also assume that Iran will receive tariff gas in compensation for pipeline use," Araman said.
However, as a WoodMac analyst noted, Iran's gas projects require time, money, and technology - resources that are currently scarce.
"With Russia also under sanctions, Iran is likely to find Russian gas a cheaper option for its remote areas. This would allow Iran to maintain and potentially improve its higher-priced gas exports to Iraq and Turkey, which have been gradually declining. If supplies permit, Oman and Pakistan could also become new export routes," he noted.
Iran's ambition to become a regional gas hub is evident, with Araman referencing a recent deal with Gazprom as further proof. On June 26, 2024, the National Iranian Gas Company (NIGC) signed a Memorandum of Understanding (MoU) with Russia’s Gazprom to purchase gas at a favorable price.
"If this deal materializes, Tehran will be able to allocate more gas to its domestic market - especially during time of peak demand in the summer – while securing access to US dollars through pipeline tariffs," he concluded.