LNG is Iran's easiest way into European gas market

Oil&Gas Materials 25 February 2016 19:33 (UTC +04:00)

Baku, Azerbaijan, Feb. 25

By Aygun Badalova - Trend:

Iran's quickest and easiest way to break into the European gas market will be through the liquefied natural gas (LNG), Christopher Haines, senior oil and gas analyst at BMI Research, a part of the Fitch Group, told Trend Feb. 25.

Exports via pipeline will likely have to leverage any expansion in the TANAP (not planned until 2022/2023 at the earliest), and there will be a lot of competition for this capacity, according to Haines.

He added that in order to send pipeline gas economically, Iran will have to send large volumes, for which there will be limited capacity and limited demand.

"LNG will be more flexible and can be sold in more incremental volumes," added Haines. "Iran already has a facility that is partially complete (stalled under sanctions), while it has been exploring floating liquefied natural gas (FLNG) options to fast-track gas exports."

Production costs will be very low and will be able to compete in the European market, he added.

The EU imported 45 billion cubic meters of LNG in 2014, or 13.5 percent of the total volume of gas import. Currently, Qatar and Angola are the main sources of LNG import for Europe.

On January 16, the International Atomic Energy Agency verified Tehran's compliance with the Joint Comprehensive Plan of Action (JCPOA), opening the way for Iran's return to the global energy market. The same day, the US and the European Union announced that they were lifting their sanctions against Iran.

The lifting of sanctions will not only make it possible to increase the production and export of oil by Iran, but will also enable Tehran to become one of the major players on the world gas market.

Iran's proven gas reserve stood at 34 trillion cubic meters as of early 2015, according to BP. The country's share on the world gas market is 17 percent.

Earlier, Iran stated that LNG export to Europe is its priority. The National Iranian Gas Exports Company (NIGEC) plans to build five plants for LNG production within three years.


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