Baku, Azerbaijan, April 23
By Dalga Khatinoglu - Trend:
Iran aims gas supplies to Oman and Europe and is preparing to start gas delivery to Iraq.
Iran's Gas Engineering and Development Company Alireza Gharibi said on April 22 that the first pipeline intended to transfer Iranian gas to Iraq would be completed in four months, making Iran capable of diversifying the second gas export route abroad.
Iran has two gas contracts with Iraq, totally counted 45 million cubic meters per day (mcmpd), alongside a 30-mcmpd gas export contract with Oman. Both mentioned contracts will be realize during the next three years.
Iran is exporting about 25 million cubic meters per day (mcmpd) of gas to Turkey, while some 1.5 mcmpd is being swapped with Armenian electricity.
At the same time, Iranian Minister of Industries, Mines and Trade Mohammad Reza Nematzadeh said on April 15 that "Iran can be a reliable, secure and long-term supplier of gas to Europe because we have the energy reserves and the plans for cooperation".
Sohbet Karbuz, Director of Hydrocarbons, France, Mediterranean Energy Observatory (OME) told Trend on April 22, "Iran could potentially contribute to Europe's gas security in terms of diversification of supply sources and routes, provided that Europe is sincere about improving its energy security".
The EU has already planned some measures to increase energy security by diversification of supplier sources, including launching more LNG terminals and accelerating the process of piping Azerbaijani gas to Europe.
The EU demands 485 bcm of gas annually, of which 150 bcm is supplied by Russia.
Karbuz says, in fact, Iran had already been considered as one of the feeding legs of the EU's southern gas corridor concept. "In the Nabucco pipeline project Iran was one of the supply sources. But the politically motivated sanctions not only eliminated Iran as a supply source but also helped kill the Nabucco project," he added.
Nabucco had been considered as a project to deliver Caspian gas, as well as Iranian gas to Europe, but after some amendments on the proposed project, finally lost in competition to the Trans Adriatic Pipeline (TAP) project in 2013.
Azerbaijani gas will be delivered to TAP through Trans-Anatolian gas pipeline in first phase, while joined by the Turkmen, Iranian gas or other Middle Eastern gas sources are excepted.
However, the imposed sanctions by EU over Iran aimed to persuade it to curb its sensitive nuclear activities diminished Iranian gas supplement chance towards Europe.
Due to sanctions, Iran also is suffering from a gas shortage, while it sits on 18 percent of the total global gas reserve. Iran produces about 575 mcmpd of gas and most of it is consumed domestically.
Iran has been attempting to accelerate completion of Phases 12, 15 and 16 of the giant South Pars gas field to increase gas output by 182 mcmpd, thus making the country capable of exporting abroad.
Karbuz added that "Even if we leave the nuclear issues aside, the place of Iran in Europe's gas supply security is questionable. This is because first, the role of gas in the EU's energy mix is a big question mark, and hence the EU's gas import needs in the long term is not more than guess work given the current blurry policy environment".
The energy expert went on saying that, "I personally would imagine a bigger role for Iranian gas in the Turkish market, provided that Iranian gas becomes more competitive".
According to him, "second, it is a very long road (not less than a decade) for Iran to become a gas exporter to Europe, be it by pipeline or LNG. This long road requires overcoming of several major barriers, particularly the improvements in and amendments to the legal and fiscal model, including buy-back agreements".
Iran has already announced several times that the country is working on a new generation of gas contracts which are more attractive for foreign companies. Iran has only the experience of sealing buy-back contracts with foreign companies, but it seems this kind of contracts has not attraction for companies any more.
According to Iran's laws, production-sharing agreements (PSA) are banned, but Iranian government said that they want to lift legal obstacles to sign production-sharing agreements with foreigners.
Iran has not unveiled the details of his mentioned new generation contracts yet.