The National Iranian South Oil Company (as the employer), the Oil Industry Pension Fund Investment Company (as the contractor) and Iran Liquefied Natural Gas Company (as the operator) have signed an agreement for the construction of Iran’s first small-scale LNG plant in Karoun Oil and Gas Production Company near Ahvaz in Khuzestan Province, the head of the state-run NISOC said.
“As per the deal, Iran LNG Company was tasked with collecting associated petroleum gas from West Karoun oilfields and converting them to LNG and storing it in cylinders,” Alireza Daneshi was also quoted as saying by ILNA.
Because of its limited production capacity, mini LNG plants are suitable for supplying small volumes of liquefied gas to remote regions using tankers and ships, he added.
Daneshi said the production capacity of mini LNG plants varies from 2,000 to 500,000 tons a year.”
In comparison, a typical large-scale plant has a production capacity of between 2.5 million tons and 7.5 million tons.
Many people in need of energy are located far from gas fields, making pipelines too impractical or costly to build. To solve this problem, gas can be cooled to make a liquid, shrinking its volume for easier, safer storage and shipping overseas.
LNG is a clear, colorless and non-toxic liquid that forms when natural gas is cooled to -162؛C. The cooling process shrinks the volume of the gas 600 times, making it easier and safer to store and ship. In its liquid state, LNG will not ignite.
When LNG reaches its destination, it is turned back into gas at regasification plants. It is then piped to homes, businesses and industries where it is burnt for heating purposes or generating electricity. LNG is now also emerging as a cost-competitive and cleaner transport fuel, especially for shipping and heavy-duty road transport.
LNG is rapidly playing a bigger role in the energy mix, as it increased from 100 million tons in 2000 to nearly 300 million tons in 2017.
According to Daneshi, KOGPC is in charge of seven production units, seven desalination units in Asmari and Bangestan reservoirs, as well as 10 gas boosting pressure stations. It also handles three gas and liquefied petroleum gas plants, a gas sweetening refinery and a crude oil pump.
"Half of KOGPC output goes to Abadan and Tehran refineries, and the rest to Kharg Island Terminal for export. The company also provides Mahshahr and Bandar Imam Khomeini petrochemical plants with feedstock," he said.
Export of LNG
According to Morteza Behrouzifar, an energy expert, natural gas export via pipelines will soon become a thing of the past, which makes it crucial for NIOC to prioritize the export of LNG.
“LNG trade is expected to surpass 500 billion cubic meters in 2023, because of strong demand in developing Asian markets. This is while Iran has not even entered the lucrative market yet.”
Iran’s Arab neighbor Qatar is selling more than 80 million tons of LNG per year while Iran, as one of the holders of biggest gas reserves, has not even started investing in the profitable business. Iranian energy officials still insist on expanding pipelines, he added.
The energy expert noted that in the past, laying thousands of kilometers of gas pipelines was the best way to sell the commodity but with the advent of modern technology, LNG markets are expanding rapidly and currently 50% of global natural gas market are dominated by LNG, which trend will grow steadily.
Iran currently supplies gas to its neighbors Iraq and Turkey via pipeline and to Armenia via road.
“If Iran targets farther destinations for gas export, it should use LNG vessels,” he said.
NIOC has no significant LNG output at present.
According to Behrouzifar, it will take four years for Iran to start mass production of the commodity.
Mohammad Hossein Adeli, the former secretary-general of Gas Exporting Countries Forum, also believes that Iran should focus on LNG exports, as shipment of liquefied gas is less risky compared to piped exports and is more cost-effective for long-distance consignments.
The completion of its largest LNG venture, known as Iran LNG, will transform the country into a major player in the global gas market.
Iran LNG Project
Reportedly, the Iran LNG Project located at Tombak Port, approximately 50 kilometers north of Asalouyeh Port in Bushehr Province, has made 60% progress with an investment of $1.85 billion. Talks are underway to complete it in two years at a total cost of $3 billion.
The former GECF chief said that by completing projects and devising plans to develop new initiatives for producing as much as 50 million tons of LNG per annum can help guarantee the country's share of natural gas exports in international markets.
Adeli believes that there is no consensus among Iranian officials over gas export.
"As long as Iranian officials do not adopt a unified policy on the issue, devising a long-term roadmap to attract investment to implement new plans will be next to impossible," he said.
Not long ago, three projects, namely Persian LNG, Iran LNG and Pars LNG in Bushehr Province, were underway 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 US annual LNG export],” he added.
