Does Iran still need Turkmen gas to feed northeast regions?

Baku, Azerbaijan, Aug. 2

By Dalga Khatinoglu – Trend:

Iran officially inaugurated the 170-km Damghan-Sari pipeline with 14.5 billion cubic meters per year (bcm/y) of nominal gas transit capacity on Aug. 1.

However, the pipeline has not been connected to a cross-country pipeline with high pressure and capacity. Before, Iran had projected to construct 11th cross-country pipeline (Igat-11) to deliver 40 bcm/y of gas from South Pars to Damghan, but the project hasn’t started yet.

The Damghan-Sari pipeline is now the continuation of a branch (North, North-east pipeline) connected to Igat-2 in the east of Tehran.

Igat-2’s capacity is 30 bcm/y, stretched from South Pars to Parchin (east of capital Tehran).

An oil official told Trend anonymously Aug. 2 that a gas compressor station is being built in Tehran-Damghan route to increase the North, North-east pipeline’s capacity, but a pressure control system has been installed in Tehran-Sari route to help distribution of gas to regions, based on needs. He added that the gas compressor station would be ready by winter, when the gas demand reaches peak point due to tripling gas usage in housing sector.

The official said the major source of gas for supplying Damghan-Sari is South Pars and the rest of gas comes from the fields located in central regions.

As Iran hasn’t succeeded so far to implement the Igat-11 project, it had to connect its northern Mazandaran Province to Igat-2 through Tehran-Damghan route. It is not clear whether Iran would be able to compensate for Turkmen gas flow cut with help of Damghan-Sari pipeline. Mazandaran’s demand for gas is 26 mcm/d, but the province’s own gas production capacity is 14 mcm/d, of which 95 percent comes from Khangiran gas field and the rest from very old small fields.

Iran has extracted about 350 bcm of 680 bcm of Khangiran field’s reserves as of now and the field has already entered to its second half-life.

Iran has planned to carry out exploration operations in the region to replace old reserves with the new ones, but in case the country can’t find any reserves it has no choice but to construct Igat-11 in mid-term to be able to supply northeastern regions with enough gas.

Turkmenistan exported 5.8 bcm of gas to Iran during last fiscal year, ended on March 20, down from 9 bcm in the previous year. It cut gas flow in January 2017 due to Iran’s long-delayed $1.8 billion debt.

Iran had to use more than 6 billion liters of diesel and fuel oil in power plants in winter, about 3 times more than other seasons due to gas shortage. Gas flow to some regions, petrochemical, CNG and cement plants was also disrupted in some weeks of winter.

It is not clear how the new compressor station in Tehran-Damghan route can help the northeastern regions this winter, but Iran has increased South Pars field’s production by 25 bcm to 155 bcm/y last year and for the current year the same amount of growth is expected.

However, the country’s demand is also growing, while Iran has started 2.5 bcm/y gas export to Iraq’s capital, which is projected to reach 9 bcm/y gradually. Iran also is obliged to export further 9 bcm/y to Iraq’s Basra in coming years. The country also has a 10 bcm/y agreement with Oman to supply gas.

Supplying gas from east to north costs a lot for Iran and new cross-country pipelines are needed. Therefore, resuming gas imports from Turkmenistan is possible. For now, Iran receives a restricted amount of gas from Turkmenistan and swaps to Azerbaijan. Resuming the gas export is also in favor of Ashgabat, because Russia stopped Turkmen gas purchase in 2015 and Turkmenistan’s solo gas client is now China, getting less than 30 bcm/y of gas from Turkmenistan.

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