Iran's weight in GECF and regional gas markets

Iran's weight in GECF and regional gas markets

By Dalga Khatinoglu, exclusively for Iran's Oil Ministry's magazine *

Iran is preparing host to a summit of the world's major gas producing countries next week.

The meeting of the Gas Exporting Countries Forum (GECF) on 23 November brings together such major producers as Russia, Qatar and Algeria as well as Iran. Together, the GECF's 12 member countries account for 67% of the world's gas reserves, for 64% of global LNG exports and for 42% of cross-border pipeline trade.

Iran with 34 trillion cubic meters of gas reserves ranks number one in the world, but the huge amount of domestic consumption allows the country to export only about 30 million cubic meters per day (mcm/d) of gas despite a 700-mcm/d production level.

However, in the light of country's hope for lifting of sanctions in the first half of 2016 as well as accelerating development of giant South Pars, Iran is preparing to become a major gas exporter in medium term.

Coming to GECF, Iran advantages a unique geological opportunities to realize an interaction atmosphere among members instead of competition as well as to link regional producers-customers.

For instance, Russian Energy Minister Alexander Novak said earlier that Gazprom has offered gas supplies to Iran under a swap arrangement, delivering gas to Iran's northern regions and taking Iranian LNG in Persian Gulf.

Iran has a LNG plant, developed by 50 percent with 10.5 million tons (or above 14 billion cubic meters natural gas) of production capacity, which is expected to become operational by 2019-2020.

Russia and Iran are connected with 1474.5-km-long Gazi-Magomed-Astara-Bind-Biand gas pipeline, put into operation in 1971 and Azerbaijan has upgraded it last decade and installed the Astara gas compressor station. However, the delivery capacity of this pipeline is restricted and Russia can deliver only 4 billion cubic meters of gas per year (bcm/y) to Iran's northwestern regions. Iran has a plan to construct a 1850-km pipeline with 110 mcm/d (40 bcm/y) of gas transit capacity to these regions, aimed to gas export to EU as well. The cost of construction of this pipeline (9th cross-country pipeline) is estimated at $6 billion. Alongside the construction of this pipeline with 17 gas compressor stations, the operational expenditures of 110-mcm/d gas transit from South Pars to northwestern regions may reach even above $1 billion annually.

Iran has also a $4 billion project (11th cross-country pipeline) to deliver 110 mcm/d of gas from South Pars to northeastern regions, of which operational expenditures may reach $250 million to $300 million annually. There are infrastructures, connecting Russia to Iran through Turkmenistan to carry out gas delivery several times more than Azerbaijani rout.

On the other hand, Iran is to boost gas production level to above 1.3 bcm/d by 2020-2021.

Overall, Iran has new agreements to export about 80 mcm/d (almost 30 bcm/y). These include a contract with Iraq, signed in 2013 for delivery of 25 mcm/d (9.125 bcm.y) to serve three power stations in Baghdad, while two countries are negotiating to supply a further 35 mcm/d (12.8 bcm/y) to the southern Iraqi city of Basra. It also has an agreement to supply Oman with 10 bcm/y and an agreement to supply 8.0 bcm/y (22 mcm/d) to Pakistan. Another Gulf neighbor, the UAE, is also being targeted as a possible customer.

Oman and the UAE are themselves both gas producers and members of the GECF, but with export facilities that cannot always be filled with their own gas. Iraq, too, has substantial gas resources and is an observer at GECF. All this helps ensure that Iranian gas relations with many of its neighbors are on a cooperative, rather than competitive, basis.

Oman's gas consumption almost doubled from 2009 to 2013. Currently the country imports above 5 mcm/d of gas through the Dolphin system, but H E Salim al Aufi, Undersecretary of the Ministry of Oil and Gas, said last April that with the rapid expansion of power generation capacity, industries and refinery projects in the sultanate, the consumption of natural gas will increase by over ten per cent annually from this year.

Coming to Pakistan it is worth noting that the Iran-Pakistan pipeline - commonly termed 'The Peace Pipeline' could also be used to serve the Indian and Chinese markets. Speaking on 30 September, Indian President Pranab Mukherjee said: "The Iran-Pakistan-India pipeline can be revived since Iran has already built section of the pipeline in its territory."

China is to build a $2 billion worth gas pipeline with 700 km length from Gwadar Port to Nawabshah to supply gas the thermal power plants there.

It has been expected that regarding Iran-Pakistan's gas agreement as well as placing Gwadar port in 80 km distance with Iran's borders, alongside Qatari gas, Iranian gas also can be delivered Nawabshah and this pipeline can be stretched towards China or India.

State-run Gulf energy company Qatargas will supply Pakistan with 3 million tons of LNG (equals to 4.14 bcm) annually for 15 years, however, However, the Pakistan's Finance Ministry's forecasted that this country would need about 290 mcm/d of gas by 2025.

It seems Pakistan has no choice but import Iranian gas. This country also is keen to import Turkmen gas through the TAPI project, but the delivery capacity of this pipeline is far less than Pakistan's forecasted gas demands in 2025.

Beside regional countries, Iran can develop further LNG plant in ten years to become gas supplier to EU, but for this goal, Islamic Republic should decrease energy intensity significantly. Natural gas shares about 70 percent in Iran's actual primary energy consumption, which is above 1.6 billion barrels of oil equivalent.

The country also needs to double the gas-injection to old oil wells to above 70 bcm/y, to increase gas delivery to power plants by 20 bcm/y to curb liquid fuel consumption and to increase gas supplement to industrial, petrochemicals and housing sectors in coming years.

If Iran can improve the efficiency of its consumption sectors significantly, then it should be able to become a major gas exporter in coming years, possibly reaching, eventually, as much as 200 bcm/y, thus rivalling Russia, which had net exports of 177.7 bcm in 2014, and Qatar, which exported 123.5 bcm.

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

*Iran Petroleum Journal

Weekly review of main events in ICT sector of Azerbaijan
Weekly review of main events in ICT sector of Azerbaijan
Azerbaijan, Turkic Council discuss creation of joint digital tools
Azerbaijan, Turkic Council discuss creation of joint digital tools
Azerbaijani IT company working on creating new network, server infrastructures
Azerbaijani IT company working on creating new network, server infrastructures
Loading Bars
EU to hand over 30 vehicles to Border Police
Solar panel station put into operation in Iran’s Razavi Khorasan Province
New auction to be held for Azerbaijani Finance Ministry's mid-term bonds
Georgia increases import of vehicles from Turkey
Kyrgyzstan imposes restrictive measures at airports
Bahar Azadi gold coin price rebounds in Iran
Foreigners to pass simplified visa procedures for 2021 F1 Azerbaijan Grand Prix
Serbian FM to visit Tehran today
Azerbaijan confirms 2,148 more COVID-19 cases, 2,287 recoveries
Armenia falsified Caucasian Albania temples in Azerbaijan - rep of religious community
Iran to send trade attaché to Azerbaijan
Weekly review of major events in Azerbaijan's oil & gas sector
Azerbaijan shares footage from Jabrayil's Dash Veysalli village (VIDEO)
Armenia strived to create history for itself in Azerbaijan's lands - Head of Albanian-Udi community
Iran reveals COVID-19 data for April 17
Volume of loaded and unloaded cargo in Iran’s Charak port climbs
Azerbaijani oil prices on rise
VICE News report on Armenia's attack on Azerbaijani Barda nominated for award
Weekly review of main events in ICT sector of Azerbaijan
Earnings from fuel savings in Iran paid to investors
Uzbekistan's CCI, Portuguese Industrial Association establish co-op
Buy/sell operations at Iran Mercantile Exchange soar
Rosatom, Uzbekistan working on contract for building nuclear power plant
Turkmenistan to create electronic exchange database
IMF calls on Georgia to reduce capital expenditures in case of lockdown
Russia reports a new high of 9,321 coronavirus cases since March 20
Azerbaijan's Albanian-Udi Christian community members visit ancient temple in Tugh - Trend TV (PHOTO)
OSCE MG should force Armenia to follow terms of trilateral statement - Azerbaijan's Parliament
Weekly review of Azerbaijani currency market
Azerbaijan, Turkic Council discuss creation of joint digital tools
Weekly review of Azerbaijani precious metals market
EU rep should follow int'l law before meeting with separatist in Karabakh - expert
Potential areas of Turkmenistan’s interaction within Visegrad Group+Central Asia framework identified
Georgia reports 1,219 new coronavirus cases for April 17
Georgia holds auction for privatization of state property
Azerbaijani MP talks about spring session of IPA CIS held in Russia's St. Petersburg
Georgia continues to conduct research on Namakhvani HPP
Iran unveils details exports from Maragheh County
Kazakhstan reveals total number of TEU containers shipped along Aktau-Baku feeder line
There have always been good grape varieties in Pirshaghi – white and black Shani - President Aliyev
Participants of Azercell Student Bursary and Internship Programs share their success stories
Iran boosts aluminum ingots production
Azerbaijani police find mortar shells, detonators left by Armenia in Gubadly (VIDEO)
Iran declares amount of loans issued to SMEs
Kazakhstan's revenues from road cargo transportation down
Concept of ensuring security of Afghan section of TAPI signed
Members of Albanian-Udi Christian religious community of Azerbaijan visit liberated Khojavand (PHOTO)
Australia to continue review of COVID vaccinations - health minister
Italian media outlets highlight speech of Azerbaijani president at int'l conference in Baku
Kazakhstan decreases import of Ukraine-made goods y-o-y
Kazakh national atomic company's subsidiary opens tender to buy compressors
Azerbaijan sets up structure to work on urban planning in liberated lands
Kazakhstan's oil & gas company opens tender to develop consolidated time standards
Meeting of EU special rep with so-called "FM of Karabakh" promotes separatism, says Azerbaijani expert
Iranian currency rates for April 17
Iran to increase vaccinations as fourth wave of COVID-19 rises
Iran reaches target uranium enrichment
Oil demand to keep on rising in May, June 2021
Work on provision of electricity to Azerbaijan's liberated Sugovushan nearing completion
Bulgaria sees Georgia as valuable partner
Significant number of Georgian citizens register for employment program in Israel
Kazakhstan’s COVID-19 caseload up by 2,822
Ukraine receives first batch of Pfizer vaccine under COVAX initiative
IMF corrects estimate on Iran's foreign exchange bank reserves
Azerbaijan attracting foreign investments for renewable energy projects
Uzbekistan to open an embassy in Sweden
Global COVID-19 infection rate approaching highest: WHO
Portugal resumes flights to Brazil, Britain
Turkey reports over 63,000 daily COVID-19 cases
EU eyes to provide grants to Georgian non-profit organizations
Israel reports 41 new COVID-19 cases, 836,740 in total
Biden signs order keeping Trump-era refugee cap at 15,000
EU-UK trade plunges after Brexit: Eurostat
UK records another 2,596 coronavirus cases, 34 deaths
UN Security Council approves ceasefire monitors for Libya
North Macedonia vaccinates some 35,000 citizens
Raul Castro resigning from Cuba’s Communist Party
Azerbaijani IT company working on creating new network, server infrastructures
Georgian Economy Ministry to form expert council on Namakhvani HPP
Relations between Russia, Azerbaijan attain degree of strategic alliance - Federation Council Chair of Russian Federal Assembly
Turkish engineers develop fiber that kills coronavirus in minutes
Uzbekistan’s gold and foreign exchange reserves drop to $32.6 billion
Iran’s petrochemical output to reach $40b: Oil Minister
Relations within CIS IA to make comprehensive partnership ties more profound among member states - Chair of Azerbaijani Parliament (PHOTO)
Azerbaijani gymnasts win set of awards at Trampoline Hopes Cup tournament
Russia to permanently ban entry for eight US officials
Liabilities of Azerbaijan's Kapital Bank increase in 1Q2021
Azerbaijan's Kapital Bank completes 1Q2021 with profit
Azerbaijan’s production of oil and gas condensate down
Big share of Azerbaijan's GDP in Q1 2021 accounts for industrial sector
Azerbaijan announces date of next coupon payments on SOCAR bonds
Uzbekistan, Kyrgyzstan increase trade turnover
Azerbaijani insurance company to increase volume of payouts
Georgia, Turkey have significant prospects for co-op in agriculture, forestry
Georgian 'Mambo Frost' company exports its products to Azerbaijan
Fighter aircraft crashes in Kazakhstan
Russia adds 8,995 COVID-19 cases
Head of EU Delegation to Azerbaijan summoned to Azerbaijani MFA
Georgian budget to save funds thanks to low-interest rate on new Eurobonds
Azerbaijan discloses number of COVID-19 vaccinated citizens
All news