LNG to Be Supplied at Energy Bourse

LNG to Be Supplied at Energy BourseLNG to Be Supplied at Energy Bourse

 The grounds needed to supply LNG at the energy bourse are being prepared, with the oil ministry promoting LNG pricing and transparency, head of the energy bourse said at a meeting with investors from small and medium-scale LNG production units.

Officials at the National Iranian Oil Company (NIOC) and the National Iranian Gas Company (NIGC) have also held meetings with experts to this end, Ali Hosseini was quoted by Shana news agency as saying.

Construction of mini LNG plants, providing the ground for LNG exports as well as pricing it in accordance with capital markets are among the measures taken by the oil ministry, indicating determination to stimulate the oil and gas industry.

NIGC has also invited Iranian and foreign investors to take part in construction of small and medium-sized LNG plant. Every prospective producer is obliged to offer at least half of the production at the energy bourse, with the storage capacity of each plant to be determined by the investor.  

Referring to the NIGC's public call, Hosseini said all interested parties including investors and experts were invited to participate in the meeting, so that decision-making would be carried out taking into account all relevant viewpoints. "This is an indicator that the authorities are serious and receptive."

With the help of experts, the NIGC was enabled to reassess all aspects of the matter which were not previously considered, Mojtaba Sheikh Bahaei, deputy director of gas supply engineering at the NIGC, said at the meeting. "With regard to construction of LNG production plants, a win-win scenario is devised to benefit both the NIGC and the investors."

The energy bourse for its part submitted a list of investor companies to the NIGC to be invited for the meeting.

On price discovery for LNG at the spot market, Hosseini said normally suppliers speculate a price, and then the bourse will conduct a primary assessment of the pricing and having had approved it, the price will be the basis of competition.

If buyers offer a higher price, the commodity will be sold to the highest bidder; but if suggested prices are close to the base price, the commodity will be distributed in proportion to the volume of orders.

The NIGC will guarantee earnings. In addition, the commodity will be offered at a price $3 lower than that of the energy bourse, which is considered to be a tangible incentive.  

The NIGC also undertakes to supply the required gas for small and medium-sized LNG production units at an agreed point of delivery during the first 8 months of the Iranian calendar year (March 21- November 22), Sheikh Bahaei noted.

LNG producers and purchasers will be authorized to export. The amount of LNG required by the NIGC, depending on network demand, will be purchased by the NIGC at a price equal to the average selling price of 30 consecutive days at the energy bourse, based on an agreement whereby the amount and delivery times are agreed upon by the both parties.

The investors, with whom an LNG plant construction agreement is signed, are required to issue and submit to the NIGC a guarantee worth three percent of the estimated investment needed for construction of the plant. The guarantee will be released once ten percent of the investment is fulfilled.

Interested parties can submit their applications before February 19.