Higher natural gas production and supply to households in most parts of the century and power plants instead of diesel, mazut and kerosene, has helped curb the use of eco-unfriendly liquefied fuels to a great extent, the National Iranian Gas Company said.
“NIGC has managed to substantially raise gas production, especially in the giant South Pars Gas Field in the Persian Gulf (700 million cubic meter per day), to meet demand of power plants and households,” Hassan Montazer Torbati was quoted as saying by IRNA.
Replacing liquefied gas cut consumption of the said fuels by at least 34 billion liters per annum.
“If the gas grid was expanded in the last five years an estimated 170 billion liters of liquefied fuels would have been used in the two sectors.”
Moreover, the moves helped curb air pollution and increased foreign currency revenue.
According to Torbati, air pollution has been an issue in the cold season in the past several years when consumption of diesel and mazut increased in power plants. However, the government has followed a policy to substitute liquefied fuels with natural gas in thermal power plants.
Iran has abundant natural gas deposits and it is more cost-effective to use gas for power generation instead of liquid fuels.
“Boosting liquefied petroleum gas export to international markets is a priority for the NIGC.” LPG output is growing as more phases of the South Pars Gas Field come on stream.
“It is time to expand our presence in overseas markets," the official said, and added that Iran annually produces 10 million tons of LPG of which 2 million tons are used domestically in the deprived areas, namely Sistan-Baluchestan, Kermanshah and South Khorasan.
High Consumption
Expressing concern over the high consumption in the three regions, he noted that household demand for LPG cylinders is about 2,000 tons per day. The National Iranian Oil Products Distribution Company (NIOPDC) sells 6,000 tons of LPG in those areas because many motorists also use the fuel instead of gasoline because it costs half as much as gasoline.
A liter of subsidized gasoline is sold for 8 cents while LPG costs less than 4 cents per kilo.
LPG has a variety of uses -- commercial, industrial, transport and household – making it a globally attractive eco-friendly fuel. According to the International Energy Agency’s 2018 Oil Market Report, demand for LPG and ethane was 12.5% of total daily oil byproduct output that was 12.4 million barrels per day in the first half of 2018 -- an increase of 4.1% over the first half of 2017.
LPG demand growth is about four times the total demand for other oil byproducts.
The NIGC chief said fresh US economic sanctions have not led to a “major setback” for Iran's share in the global LPG market and it now accounts for 17% of LPG trade in the Middle East. This share is expected to grow to 40% by 2025.
“Sanctions have not much affected our export of oil byproducts, primarily fuel oil used for power generation and shipping as well as LPG for cooking gas and petrochemical feed.”
Iran exports LPG to clients in Asia, including China, Pakistan, Iraq and Turkey.
Unlike crude oil, where the ultimate buyer is a refinery, fuel oil and LPG can find their way to potentially thousands of small-scale industrial or residential buyers.
“The market for these two products is such that finding and targeting those individuals is not easy,” he said, in reference to the persistent threats made by the United States under Donald Trump to punish companies and countries that buy Iranian oil and gas.
South Pars is the world’s largest gas field shared between Iran and Qatar. Iran is developing the mega project in 24 phases. The field meets more than two-thirds (700 million cubic meters per day) of the domestic demand for gas.
