Russia’s dominance in global gas markets in absence of Iran
By Dalga Khatinoglu
Iran's Deputy Oil Minister Hamidreza Araqi announced on November 19 that Shoorijeh gas storage facility, located in the northeastern province of Khorasan, will not come on stream in the current Iranian calendar year (to end March 20, 2014).
This means that the country still remains highly dependent to gas imports from Turkmenistan. But while Iran still needs to import gas from neighboring countries to meet its domestic demands, Russia which has less gas reserves compared to Tehran, is developing its dominance in the global gas markets.
The Mehr News Agency reported on November 19 that the Shoorijeh gas storage facility will not come on stream in the coming winter.
According to the latest report released by United States' Energy Information Administration (EIA), Iran's gross gas output in 2011 was around 224 billion cubic metres. Some 67 percent of the mentioned amount was turned into dry natural gas, while 16 percent was injected to the oil wells, and some 17 percent was burned.
The British Petroleum Company also said in its latest report that Iran's dry natural gas output in the previous year was around 160.5 billion cubic meters.
In general Iran's dry natural gas output plus the amount injected to the oil wells stand at 570 million cubic meters per day.
It is while the Mehr News Agency has reported that based on the data collected by Iran's Oil Ministry, the country needs over 700 million cubic meters of gas per day in the coming winter.
Iran's gas consumption in the warm months is low. So the country could have stored some considerable amount of gas in its storage facilities for the cold months. But currently just the Sarajeh gas storage facility with 3.3 billion cubic meters capacity is operational, which can only supply enough gas for 5 days of consumption at the mentioned rate.
In the calendar year of 1390 (which ended on March 20, 2012), Tehran imported 12 billion cubic meters of gas from Turkmenistan. But Ashgabat reduced its exports to Iran to 4.5 billion cubic meters and the trend still continues. It is while based on the signed contract, Iran is obliged to export 10 billion cubic meters of gas to Turkey each year.
Russia's dominance in global gas markets
Iran has the world's biggest gas reserves equal to 33.6 trillion cubic meters, but has no surplus gas to export. However, unlike Iran, Russia is rapidly developing its gas dominance in the global markets.
According to a report published by BP, Russia with 592.3 billion cubic meters was the world's second largest gas producer in 2012, next to the United States with 681.4 billion cubic meters. Moscow exported over 170 billion cubic meters of the mentioned amount. The country annually buys around 30 billion cubic meters of gas from Kazakhstan, Turkmenistan, and Azerbaijan in order to export the gas to other countries. By purchasing gas from the mentioned countries, Russia ensures its monopoly in exporting gas to the western countries.
The Russian government totally exported 130 billion cubic meters of gas to the European countries in the previous year. Moscow also exported 56 billion cubic meters of gas to Belarus, Ukraine, and Armenia. The country's liquid gas exports also stood at 14.8 billion cubic meters in 2012. China, Japan, and South Korea were the main destinations for Russia's liquid gas exports.
By exporting gas to over 20 members of the European Union, Russia supplies 25 percent of the block's total gas need. It is while Moscow is gradually increasing its gas exports to EU's eastern and central members. Except for Romania, which has its own gas reserves, other central European countries meet averagely 70 percent of their gas needs by importing from Russia.
According to the EU's latest official report for 2013, Russia increased its gas exports to the block by 10 percent in the first half of the current fiscal year compared to the same period of time previous year.
Russian gas pipelines towards East & West
Russia exports gas to Europe (plus Turkey) through Yamal, Blue Stream and North Stream pipelines, however in details, the number of fine and coarse pipelines transferring Russian gas towards West (passing from Ukraine, Belarus and beyond them) is 22 pipelines in framework of 13 projects.
Russian Gazprom has a monopoly on gas exports.
According the official statistics published both on GASPROM website and BP report, The mentioned pipelines total gas export capacity is above 250 billion cm p/a.
However, Russia has some other pipeline construction projects, including North Stream 1 and 2 as well as South Stream pipelines. After implementation of these projects the country's total gas export capacity via pipelines to Europe would reached to above 380 billion cm p/a until 2025.
Russia also decided to realize an east route pipeline within the framework of the Eastern Gas Program, aimed at exporting 30 billion cm p/a of gas to China until 2015 as well as supplying gas to other Asia-Pacific markets.
Despite the fact that Iran holds greater gas reserves than Russia, it does not supply the European Union. Iran has even fallen short of fulfilling its obligation to export 10 billion cm p/a to Turkey. Yet the country could supply only 7.5 billion cm to Turkey in 2012, according to BP annual report.
Iran also has been abandoned from the TAP project, which would be connected to Turkey's TANAP project, aimed at exporting Caspian Sea and Middle East gas to Europe.
The EU has accelerated installing liquid natural gas (LNG) terminals to strengthen diversification of imports. However, all of Iran's LNG production plans have been halted due to sanctions and the country hasn't any LNG production to export.
However, Qatar, Iran's partner in joint giant field South Pars, exports 19.2 bcm of natural gas and 105.4 bcm of LNG annually.
According to the BP report, Qatar exported 33.1 bcm and 66 bcm of LNG to Europe and Asia-Pacific respectively during 2012.
Iran who holds 18 percent of the world's total gas reserves had no share in 1.033 trillion cubic meters exported gas on the international markets in 2012 and yet has to import Turkmenistan gas to make it through the winter.
Dalga Khatinoglu is Iran News Service head of Trend Agency