Prospect of Caspian littoral states’ gas industry

Prospect of Caspian littoral states’ gas industry

Below is an article, exclusively written by Dalga Khatinoglu, the head of Trend Agency's Iran News Service for Iranian Oil Ministry's news website Shana.

Iran and its neighbors hold more than 70 percent of world's total gas reserves. Iran, Russia, Qatar and Turkmenistan are world's largest gas reserves' owners respectively.
But none of Iran's neighbors, except for some certain projects, has any interaction with others in gas industry. They ignore the available cooperation opportunities viewing each other as tough rivals.
Iran's littoral neighbors - in the north and south- enjoy significant gas reserves. On the other hand, Iran's eastern and western neighbors are in dire need of gas and power. So, Iran can play the role of a regional hub for gas or power exports. But in practice, Iran is importing and exporting only a limited amount of gas and power.
With the current joint gas markets in the region, it seems we will see an intense rivalry between regional states to raise their share in the global gas markets. There are some options for cooperation in this field.

Caspian Region

The five littoral states of the Caspian Sea have in total about 85 trillion cubic meters (45 percent) of the worlds' proved gas reserves.

A glance at the Caspian Littoral States' Gas Industry (bcm/a)

Caspian Littoral States

Natural Gas Production in 2014*

Gas Production based on BP figures for 2013**

Net Exports of Gas in 2014 (Including LNG)

Iran

210

166.3

2.5

Russia

640.3

604.8

162

Turkmenistan

76

62.3

44

Azerbaijan

29.5

16.2

8.5

Kazakhstan

43

18.5

11

* The figures are taken from official sources or statements in the mentioned countries
** Excluding the flaring and re-injected gas.


Azerbaijan's gas export to Russia decreased more than 1.1 billion cubic meters in 2014. Russia also planned to decrease Turkmen gas import from 10.5 billion cubic meters (bcm) in 2014 to 4 bcm in 2015. Turkmenistan's gas export to Iran stood at just 7.5 bcm in 2014, while this country should deliver 14 bcm per annum to Iran based on existent agreements.

So, to meet their constant energy security, the Caspian littoral states have no other way but to reach the European and Chinese markets.

Considering eastern, western markets

No Caspian littoral states except Russia views European markets as a potential gas market by 2019.
Turkmenistan is still hesitating to export its gas via Trans-Caspian Gas Pipeline and instead prefers to put its focus on the eastern markets. This comes as Russia's gas export to Europe decreased by 14.3 bcm in 2014 compared to the previous year. On the other hand, Europe is planning to lessen by 25 percent its dependence on Russian gas by 2020.

But China increased its gas imports from Turkmenistan and Kazakhstan last year by 5.8 percent and 159 percent respectively. China which used to consume annually 25 bcm of gas in 2000 has increased its gas consumption to over 180 bcm/a currently. It is now expected to raise its consumption to 420 bcm/a and 555 bcm/a by 2020 and 2030 respectively.
Despite reducing its gas export to Russia by 6 bcm in 2015, Turkmenistan is set to increase its total gas export to 48 bcm. To put it differently, in the current year, Turkmenistan gas export to China will rise by at least 8 bcm/a reaching 34 bcm/a in current year.

On the other hand, Russia is set to export up to 38 bcm/a of natural gas from fields in East Siberia to China over a 30-year period starting after 2018 through the Power of Siberia pipeline, of which construction started earlier in September.

Currently, Russia is one of China's LNG suppliers.

Russia's gas supplies to the Asia-Pacific Region by 2035 can rise ninefold from 14 bcm/a to 130 bcm/a, Russian Energy Minister Alexander Novak said on February 27.

Turkmenistan also plans to allocate about 36 bcm of its gas to domestic consumption in 2015. BP had estimated just over 22 bcm for Turkmenistan's domestic consumption in 2013. It seems that the country has decided to increase its domestic gas consumption in power plants as part of efforts to increase its electricity production for further export.

Now, Turkmenistan is vying with Tehran for taking a greater share in the energy markets of Iran's eastern neighbors. To this end, negotiations are underway over establishing a gas pipeline among Turkmenistan, Afghanistan, Pakistan and India (TAPI). Pakistan was expected to import Iran's gas based on an agreement signed two months ago, but the country has not yet taken any step to start the required pipeline construction for this end.

On the other hand, Iran and Russia are vehemently against the Trans-Caspian Gas Pipeline project for exporting Turkmenistan's gas to Europe through Azerbaijan.

Turkmenistan plans to raise its gas production to 230 bcm/a by 2030. Based on current agreements, the total volume of China's gas import from Turkmenistan will remain at 65 bcm/a by 2020. China is determined to receive 85 bcm/a gas from Central Asian countries by this date.

As a result, Ashgabat needs to develop a comprehensive plan to diversify its gas markets because as things stands, Iran and Russia will not import further gas from Turkmenistan.
Iran plans to raise its gas production to 365 bcm/a by 2018. Meanwhile, the country's gas export would reach to 80 bcm/a by 2022. Iran's Outlook Plan Document has envisaged exporting gas to Europe. At present, Iran has obligation to export 52 bcm/a of gas based on signed memorandum of understandings (MoU) and agreements to Iraq, Oman, Pakistan and Turkey, but it exports only 10 bcm/a to Turkey currently.

Azerbaijan is also working on a plan to start exporting annually 16 bcm/a of gas to Turkey and Europe from Shad Deniz Stage 2 (SD2) by 2020. So, Iran and Russia would play the role of main rivals for Baku government.

At the same time, Europe has decided to decrease its gas import from Russia by about 25 percent (45 billion cubic meters) by 2025. This is part of a larger plan to decrease the block's dependence on Russia's gas which is standing now at 27 percent. If become operational, the decision would prepare the ground for Iran and Azerbaijan's export to Europe.

Converting gas to power option

So, as said above, a tough competition between regional states to gain more shares in the global gas markets seems almost inevitable. But the issue of converting the natural gas to electricity and its export is also among the options that first attracted huge attentions from Iran and its northern neighbors but they left it undecided later.

Last year, Iran imported 3,718 million kilowatt-hours (KWh) of electricity, 67 percent of which comes from Turkmenistan. Back in December 2008, members of the Economic Cooperation Organization (ECO) including all Central Asian countries, Iran, Afghanistan, Pakistan, Turkey and Azerbaijan agreed to hold talks on converting some of their gas to power. The agreement was part of a larger plan to establish a regional power network for exporting power to Iraq, Europe and Syria. The issue was forgotten later. Now, Iran and Turkmenistan are working separately to increase their power production. Last year, Turkmenistan increased its electricity production by about 12 percent. The country exports 2.8 billion KWh of electricity but based on a state program, Ashgabat plans to establish 14 new power plants to raise its electricity production to 27.4 billion KWh.
Iran which exports annually about 12 billion KWh of electricity, is now planning to allocate further 6 bcm/a of its gas to new power plants by 2018 to increase its power export by additional 5,000 MW.

Iran is now producing more than 70,000 MW power (Equivalent to about 263 billion KWh electricity). On the other hand, Azerbaijan is exporting more than 2 billion KWh. But since Iraq and Turkey are importing 68 and 20 percent of Iran's power export respectively, the idea of establishing a regional network for exporting Azerbaijan's power to these countries via Iran seems very promising.

Iran's eastern neighbors, Afghanistan and Pakistan both constitute about 10 percent of Iran's power export. So, Turkmenistan can gain a greater share in these markets via Iran. For the time being, Ashgabat is exporting about 250 MW power to Afghanistan.

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

Follow him on @dalgakhatinoglu

Subscribe to Trend in Google News! Subscribe
Azerbaijan exceeds commitment under OPEC+ deal
Azerbaijan exceeds commitment under OPEC+ deal
Azerbaijani oil prices fall
Azerbaijani oil prices fall
Equinor, SOCAR mull opportunities for exploration at ADUA
Equinor, SOCAR mull opportunities for exploration at ADUA
Loading Bars
Latest
Georgian energy reform to create competitive market
Turkmenistan, UN talk co-op in food security
Turkmenistan, EU to intensify co-op in number of areas
Turkic states need jointly fight disinformation campaigns - Azerbaijani president's assistant
Kazakhstan boosts monetary base indicators
Azerbaijan exceeds commitment under OPEC+ deal
Kazakhstan's TOP-3 trade partners for 8M2021 announced
Pushed by ‘Covid growth drivers’, India on course to be $5 tn economy by 2024-25, says Puri
BCCI could earn up to $5 billion from IPL broadcasting rights
Chip crunch to cut Renault's 2021 output by 500,000 cars
2020 became particularly significant year for Azerbaijani people - president's assistant
Azerbaijani oil prices fall
President Ilham Aliyev, First Lady Mehriban Aliyeva and their daughter Leyla Aliyeva attend inauguration of DOST Center for Inclusive Development and Creativity
Kazakh energy company opens tender to buy bitumen
Uzbekistan Airports JSC cuts tariffs for foreign airlines
President Ilham Aliyev, First Lady Mehriban Aliyeva and their daughter Leyla Aliyeva view conditions created at new rehearsal building of National Gymnastics Arena
Equinor, SOCAR mull opportunities for exploration at ADUA
Uzbekistan’s Jizzakh Automobile Plant eyes increasing production capacity
Kazakhstan reports increase in product transport via pipelines
Kazakh energy company opens tender to buy electrical goods
In 44-day war in Karabakh, we witnessed two-faced behavior of int’l media – Erdogan
Azerbaijan's main goal after victory is restoration of Karabakh - president's assistant
Creation of green zones in Azerbaijan’s liberated territories - part of UN program to combat global climate change – Deputy Minister
Chambers of Commerce of Turkmenistan and Switzerland hold business forum
Gas prices to ease, but to remain elevated in Europe
Georgia shares data on COVID-19 cases for October 22
Turkmenistan to organize Business French language training for female entrepreneurs
JICA to issue report on Study for Electric Power System in Azerbaijan next year
Japanese companies to invest in Georgian energy sector
Kazakhstan introduces electronic customs escort of vehicles during goods transit
Azerbaijan, UN sign MoU to promote corporate sustainability
Azerbaijani Finance Ministry to put medium-term gov't bonds up for auction
Azerbaijan reveals state budget revenues for 9M2021
Azerbaijan's consolidated budget revenues increase
Expenditures of Azerbaijan's state budget for 9M2021 revealed
U.S. drops tariff threat in digital tax transition deal with European countries
Sputnik V contributes to one bln coronavirus vaccinations in India
Israel to readmit COVID-vaccinated foreign tourists next month
Oil prices drop; Brent on track for first weekly dip in seven
Higher oil, natural gas prices to see some demand destruction
IsDB Institute Wins Again ‘Best Islamic Research Firm’ Award
1,742 more COVID-19 cases reported in Kazakhstan
Biden says does not want cold war with China
Chamber of Commerce head talks Iran's trade, tourism ties with Oman (Exclusive)
NATO ministers agree on defense plan, investment in innovation
Biden climate envoy Kerry to visit Saudi Arabia next week
Israel adds 5 cases of COVID-19 Delta variant "AY4.2"
Prop gun misfire kills woman on set of Alec Baldwin movie
EU leaders call for stepping up work on mutual recognition of vaccine certificates
Toronto says police not vaccinated by Nov 30 will be put on unpaid leave
British Queen cancels trip to spend night in hospital
World's biggest triceratops sells for $7.7 million in Paris
UK records more than 50,000 new coronavirus cases
Syria executes 24 people over deadly forest fires
Azerbaijan climbs to 26th place in UEFA coefficients table
Russia, China are friends in each other’s interests, not against others — Putin
Chronicles of Victory: First VP Mehriban Aliyeva interviewed by Trend News Agency on October 22, 2020
Chronicles of Victory: October 22, 2020
French PM pledges cash to help drivers cope with rising energy prices
Qarabag FC wins another victory at UEFA Conference League
Putin makes statement on Karabakh
Uzbek Central Bank: Food prices have risen by 14.4%
Georgian Parliament Speaker to meet Moldovan counterpart in Greece
Brussels' utopian green energy fantasies spark energy crisis in Europe — Hungarian PM
EU prioritizes digital sector development in Azerbaijan
Russia planning several new business visits to Azerbaijan by year-end - official
Russian company to implement micro-mobile transport project in Baku
First Vice-President Mehriban Aliyeva makes Instagram post on visit to Zangilan (VIDEO)
Azerbaijan Investment Holding, Kazakhstan National Welfare Fund sign memorandum of co-op
SOFAZ’s revenues from profitable oil and gas sale up
Executive Power of Azerbaijan’s Tovuz district opens tender for road repairs
Kazakhstan, Russia discuss gas supply issues
Russian company may set up 'smart' bus stops in Azerbaijan's liberated lands
Azerbaijan publishes updated list of servicemen martyred during second Karabakh war
IBF VP talks growing interest of investors in Azerbaijan's liberated lands (VIDEO)
SOFAZ sees increase in budget revenues
Uzbekistan's GDP growth in 9M2021 sparks promising forecast
Azerbaijan developing preliminary conceptual design of railway route to liberated Kalbajar (PHOTO)
Goldman Sachs, Freshfields working on possible Porsche IPO
Kazakhstan to liquidate emergency wells in several regions
Large-amount loans issued in Iran's services sector
Azerbaijan, Russia talk cooperation opportunities in insurance sector
Azerbaijan records surplus in state budget
Azerbaijan's Sumgayit Technologies Park, Alat FEZ sign MoU on strategic co-op
Azerbaijan shares data on number of vaccinated citizens
Head of EU delegation talks financial aid to Azerbaijan, following end of Karabakh war
U.S. weekly jobless claims drop to 19-month low
Uzbek Central Bank publishes data on country's gold, currency reserves
Trade turnover between Turkmenistan, Uzbekistan grows sharply
FIMI buys Ashot Ashkelon stake from Elbit Systems for $88m
Azerbaijan confirms 2,005 more COVID-19 cases, 1,011 recoveries
Uzbek Central Bank reveals data on total liabilities of banks
Iran sees decrease in load/unload operations in Astara port
Kremlin hopes for EU certification of Russia's vaccine
Bahar Azadi gold coin price begins to rise in Iran
India enters 100-crore vaccine club to fight Covid, PM Modi says nation scripts history
Hungarian University Forum and alumni meeting in Baku
Central Bank of Iran shares data on loans issued for trade sector
Turkmenistan doubles greenhouse tomato exports to Russia
Turkey's position on opening Zangezur corridor - unchanged – President Erdogan
All news