Drawing on the experience of Russian oil and gas giants is crucial to transform Iran into a major player in the global gas market, the former chief executive officer of National Iranian Oil Company said.
“Using the expertise of Russian gas giant Gazprom and Lukoil, Russia's No. 2 oil producer, will enable NIOC to access advanced technology for extracting gas from deep geological repositories to produce and export liquefied natural gas,” Ali Kardor also told ILNA.
Supplying gas to Europe and even to neighboring states (like Pakistan) via pipeline is not viable due to political instability and clash of interests, he added.
The former NIOC chief noted that Ankara does not permit Iran to use its territory to lay pipelines for transporting gas to Europe as it wants to purchase gas from NIOC and deliver it to target destinations.
“Azerbaijan and Russia have also followed the same strategy and they have already started collaboration to capture lucrative markets in gas-thirsty Europe,” he said.
Referring to the failure of major projects like the Iran-Pakistan Gas Pipeline Project — aka Peace Pipeline — (delayed for more than 10 years due to US pressure on Islamabad), Kardor said large volumes of LNG in the world are sold in the form of single oil cargos under spot contracts and “we could do the same”.
Shipment of LNG is less risky compared to piped exports and more cost-effective for faraway destinations
The IP pipeline project is a 2,000-km pipeline intended to supply natural gas from Iran’s South Pars fields to Pakistan's two major cities: Karachi and Multan.
Iran has fulfilled its commitment regarding the construction of the gas pipeline inside its territory and is waiting for Islamabad to do its share.
Insisting on selling gas to Pakistan through pipeline is a wrong policy, as the US will not allow the energy-strapped nation to become dependent on Iran. Moreover, Pakistan meets all its needs by importing LNG from Qatar and is not willing to purchase gas from Iran.
“Extending gas pipelines from the southern port of Asalouyeh in the Persian Gulf in Bushehr Province to neighboring states has always been marred by political issues [sanctions and wars] and, in optimistic terms, may work only for a short period,” he said.
“Nonetheless, LNG can be exported easier and more flexibly as it has bigger international markets.”
Promising Future
The former NIOC chief said if we had LNG, we could export it not only to Pakistan but also to Europe, adding that unlike piped gas, LNG export has a promising future.
NIOC should focus on LNG exports, as shipment of liquefied gas is less risky compared to piped exports and more cost-effective for faraway destinations. But it seems there is no consensus among senior officials and policymakers on this subject.
Not long ago, three projects, namely Persian LNG, Iran LNG and Pars LNG in Bushehr Province, were being completed but were put on hold due to funding problems.
“Had they been completed, the National Iranian Gas Company could be exporting as much as 20 million tons of LNG per year [equal to the US annual LNG export],” he said.
Despite the ground realities, Iran’s energy officials are still hopeful of the gas deal with Pakistan and India, whereas investing in liquefied forms could have yielded more desirable results, especially in the long run.
LNG accounts for 31% of the global gas trade, of which 70% are carried out in Asia and the Middle East. There are currently 60 LNG terminals in Asia, with 40 others in the pipeline.
"The LNG industry paves the way for entering new markets, access to which is not feasible through pipelines,” he said.
Iran holds the world’s second biggest natural gas reserves after Russia and the fourth-largest known oil reserves. It is home to 17% of the world's proven natural gas reserves and more than one-third of OPEC reserves.
The world's largest natural gas field, South Pars, is shared between Iran and Qatar, and is estimated to hold roughly 40% of Iran's gas reserves. Qatar is currently the biggest LNG producer in the Middle East and ships 77 million tons of the fuel per annum.
Iran currently supplies close to 50 million cubic meters of gas per day to its neighbors Iraq and Turkey via pipeline and to Armenia by road.
The bottom line is that the world needs more gas and more energy, so if coherent policies are drawn up, the much-needed investment to run LNG projects can be attracted and then Iran could be a game-changer in the gas market.
