Gas Supply Deals With Private Sector

Gas Supply Deals With Private SectorGas Supply Deals With Private Sector

Six gas supply agreements were signed with private firms for the purpose of increasing electricity generation and exports, oil minister Bijan Namdar Zanganeh said Tuesday.

The oil ministry has expressed readiness to supply the required gas at an agreed quantity and location to generate electricity for exports. The National Iranian Oil Company (NIOC) or the National Iranian Gas Company (NIGC) will provide the gas as per occasion, Shana news agency reported.

Supplying gas for electricity generation is put into practice in line with Article 13 of the Economy of Resistance policies, aiming to counter oil dependence by involving private firms in sales operations and increasing electricity exports. The policy was proposed by the Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei to compensate for the sanctions' economic impact, promote domestic growth and reduce consumption.

"Neighboring countries are the main market for Iran's gas and electricity exports," Zanganeh said, adding that even if gas prices stand at 13 cents per cubic meter, a price proposed by the parliament's energy committee, gas supplies to petrochemical complexes are still 40 percent cheaper than the exported gas.

The price of gas for export was 36 cents (per cubic meter) at the start of the current Iranian calendar year (began March 21, 2014). Zanganeh noted that the exported gas is mainly utilized for power generation. Currently, a preliminary agreement is signed with Iraq whereby Iran will supply gas to Iraqi power plants for electricity production. A second agreement is due to be signed, said the minister.

Iran plans to begin supplying natural gas to Iraq on a regular basis in May. The agreement is aimed at supplying Al-Baghdad and Al-Mansouriyah power plants in Iraq with 25 million cubic meters per day of natural gas.

Iran’s annual electricity exports to Iraq are valued at $1 billion, with Baghdad importing 1,300 megawatts (MW) of electricity from Iran per day.