The oil and gas sectors are among the most lucrative industries for investment in Iran, considering the country’s potential, but pinning all hopes on Russian firms is not a wise policy, a prominent Iranian energy consultant in the UK and Iran said. cooperation
“The National Iranian Oil Company should pursue energy policies in a way that it can attract funds from all over the world, as putting all eggs in one basket is a big risk with irreparable consequences,” Narsi Qorban was also quoted as saying by the Oil Ministry’s news agency.
Referring to a recent MoU signed between NIOC and Russia’s oil and gas giant Gazprom to develop three gas fields and five oilfields shared with Arab neighbors, he expressed hope that executive operations will start soon.
The $40 billion MoU was signed by Mohsen Khojastehmehr, the NIOC chief, and Vitaly Markelov, Gazprom deputy chairman of executive board, in an online meeting last week.
According to Qorban, who is also the managing director of Narkangan Gas to Liquid International Company, the key oil sector has long been the main driver of economic growth in Iran, so attracting foreign and domestic investments for the development of joint hydrocarbon fields should always be on NIOC’s agenda.
Nonetheless, collaboration with foreign firms should not be limited to one or two Russian and Chinese firms because cooperation with other international companies will help NIOC attain its long-term goal much faster.
Teaming up with Gazprom is part of a long-term plan to invest about $160 billion in the upstream sector, of which $90 billion will go to the oil industry and $70 billion to the gas industry.
The $160 billion investment will help raise crude output from the current 2.5 million barrels a day to 5.7 mbd in 2030. Natural gas production is expected to increase by 500 million cubic meters to reach 1.5 billion cubic meters in the eight-year period.
Gazprom’s investment, if it is realized, will only account for one-fourth of the total funding that NIOC requires to fulfill its ambitions and the rest should be attracted from other resources.
Lower Costs
Oil and gas development in Iran is attractive to foreign companies, thanks to the relatively lower costs of oil and gas production/exploration in the country.
A barrel of Iranian crude costs less than $30 to produce, making Iran one of the world's most attractive places for exploration and production after Saudi Arabia and ahead of Iraq.
UK oil is the world's most expensive crude to produce, costing roughly $55 a barrel. Oil production in Brazil, Nigeria, Venezuela and Canada is also costlier than in the US, the report said, as drillers in the United States have adopted more efficient technologies
Iran has the world's second-largest proven natural gas reserves (34 trillion cubic meters) and the fourth-largest crude oil reserves (157 billion barrels). Based on estimates, Iran can draw on its oil and natural gas reservoirs for at least 50 and 80 years respectively, excluding new discoveries.
Qorban said introducing Iran's natural gas capacities by holding technical panels and exhibitions can be an effective way for attracting domestic and foreign investment in the lucrative industry, too.
According to the energy expert, the country accounts for 10% of the world’s gas reserves and it is the third biggest gas producer and consumer in the world, which makes it a potentially key player in the global gas development ventures.
"Arranging exhibitions like the International Iran Gas Show helps maximize interactions among domestic private sector, the National Iranian Gas Company and foreign investors," he said, adding that as long as capacities are not introduced, efforts to attract investment will be in vain.
Economic Prosperity
Qorban noted that gas industry can be another driving force behind Iran's economic prosperity, if long-term plans are made to increase export.
"Iran's production accounts for over 5% of the global figure while its share in the global gas commerce is a meager 1%," he said.
The energy expert, who also serves as chairman of Qeshm Energy International, believes that the private sector has played a constructive role in gas development ventures, namely in manufacturing equipment, constructing refineries and laying transmission pipelines.
"Gas has an 80% share in the country's energy basket," he said, adding that judicious consumption of the fuel will help generate more revenues via exports.
Qorban believes Iran's neighbors such as Pakistan, India, Afghanistan, Azerbaijan, Georgia, Turkey and Iraq could be among top markets for the country’s strategic fuel.
"Iran could liquefy its gas and export liquefied natural gas to China, India, South Korea and Japan," he said.
According to Mohammad Ali Khatibi, Iran’s former representative to the Organization of Petroleum Exporting Countries, natural gas will account for a major part of energy basket in Iran as it is the most prolific source of energy and has clear advantages in terms of lower pollution and production costs.
“Iran’s proven gas reserves are worth €7 trillion,” he said, adding that the industry can play a key role in revitalizing its weak domestic economy.
