Iran will sign a gas contract with Turkmenistan and import 10 million cubic meters per day later this month, the oil minister said on Tuesday.
Javad Owji made the announcement after meeting Batyr Amanov, Turkmen deputy prime minister for oil and gas, in Tehran, the Oil Ministry’s news service Shana reported.
“Iran started swapping 1.5 to 2 billion cubic meters of gas per year with Turkmenistan two years ago, which figure increased last year,” he added.
According to Owji, Turkmenistan is the fourth-largest holder of gas reserves in the world and Iran has an import capacity of 40-50 mcm/d.
“We intend to boost our gas trade [swap, transit and transactions] in the region, which will be beneficial for both countries,” he said.
The volume of natural gas swapped between Iran and Turkmenistan soared by 385% in 2022 compared to the previous year.
The National Iranian Gas Company’s revenues via swap operations also grew by 530% during the period.
In December 2021, Tehran signed a gas swap agreement with Ashgabat and Baku, based on which NIGC delivers 2 billion cubic meters of Turkmen gas to Azerbaijan annually.
Under the swap deal, NIGC receives gas from Turkmenistan, located to the east of the Caspian Sea and delivers an equivalent volume to Azerbaijan on the western side of the sea at the Astara border.
As per the new deal between Turkmenistan and Azerbaijan, NIGC is expected to boost gas import from Turkmenistan by at least 70% in 2023.
With the largest high-pressure gas pipeline network after Russia, Iran can play a key role in transferring gas from east to west.
Although Iran has major natural gas fields in the south, it has imported gas from Turkmenistan since 1997 for distribution in its northern provinces, especially during the winter.
Turkmenistan used to send nearly 5 mcm of gas to Azerbaijan through Iran up until 2017 when it was brought to a temporary halt due to a row with Iran over unpaid gas bills.
The two countries managed to settle the row out of court, as officials in Tehran signaled their willingness to put aside differences with the neighboring state.
“Iran has recently paid a $1.65 billion debt owed to Turkmenistan for importing gas in the previous years,” Owji said, calling it an important issue settled in the energy sector.
Turkmenistan has been exploring options on gas swap deals with Iran to export its fuel to markets further afield. Because of economic challenges, Turkmenistan has been seeking more buyers for its natural gas riches other than China.
Cooperation With Northern Neighbors
Considering its large-scale access to equipment and pipelines, Iran’s Oil Ministry is keen on resuming swap operations with northern neighbors.
NIGC has the infrastructure for increasing gas import and swap with neighboring countries to 15 billion cubic meters per year.
According to Owji, NIGC and Russia’s oil and gas giant Gazprom will soon finalize a natural gas swap deal in Moscow, as fruitful talks have been held between the two sides.
The deal with Gazprom will also be a big step for Iran, as it would ensure a stable gas supply to the country’s northeastern regions, which are far away from the sources of natural gas in the country.
NIGC’s data show that the company’s exports in 2022 increased by 10% and 79% in terms of volume and revenues respectively compared to 2021.
Iran ranked third in terms of gas production in 2021, after the US and Russia, with 256.7 billion cubic meters.
With 256.7 bcm of gas output, Iran’s share of the world's natural gas production in 2021 was 6.4%.
In the past decade, natural gas production in Iran has grown by an average 5.4% annually, which is more than twice the global average growth. The world's natural gas production has grown by an average of 2.2% per year in the 10-year period.
