Parliament Calls for Power Generation from APG

Parliament Calls for Power Generation from APGParliament Calls for Power Generation from APG

Associated petroleum gas (APG) should be utilized to generate electricity, head of the parliament's energy committee said, referring to economic and environmental burdens that have been imposed on the country for having long overlooked the issue.

"The parliament and its energy committee are heedful of the colossal waste," Ali Marvi was quoted by ISNA as saying. Laws and regulations were ratified to address the issue, yet their implementation requires simultaneous effort of all pertinent authorities.

Iran has the highest rate of energy waste in the form of APG in the Middle East, and ranks third in the world in terms of APG wastage after Russia and Nigeria. Despite many projects implemented to reduce APG flaring, APG volume stood at 25.2 million cubic meters per day (mcmd) in 2012, which "equals production from one phase of South Pars gas field," he noted.

APG or flare gas is released as a `byproduct of petroleum extraction. The flaring of APG is controversial as it is not only a pollutant, a source of global warming but also a waste of a valuable fuel source. The gas can be utilized in a number of ways after processing; additionally, it can be both sold and included in the natural gas distribution networks, used for on-site electricity generation with engines or turbines, reinjected for enhanced oil recovery or used as feedstock for the petrochemical industry.

Mindful of the exorbitant waste, in November 2014, the oil ministry ultimately announced a public tender to put APG to better use by selling it to private firms or individuals. The tender offers 19.6 mcmd of APG produced in 50 oil fields owned by the National Iranian Oil Company (NIOC)'s subsidiary companies.

While electricity generation from APG is costlier than what is produced in conventional power plants, the oil ministry's APG pricing formula is unrelated to the price at which the electricity generated through APG is set to be purchased by the energy ministry.

Construction of power plants to utilize APG would be economical once the government guarantees to purchase the electricity at export prices, that is 6-7 cents per kilowatt hour.

Another drawback, the official mentioned, is lack of sufficient guarantees concerning gas supplies to investors. In the face of volatility of APG, the government does not guarantee to provide investors with natural gas and merely provides for a marginal discount in gas prices at times when gas pressure declines.

"Despite private investors' obligation to provide domestic or foreign customers with electricity, the terms of tender provide no assurance on supply stability," Marvi noted.

The World Bank estimates that over 150 billion cubic meters of natural gas are flared or vented annually. This amount of gas is worth approximately $30.6 billion, equivalent to 25 percent of the US annual gas consumption and 30 percent of the European Union's annual consumption.

  Fuel Prices Formulated

Fuel prices for electricity exports have been formulated, deputy energy minister said, expressing hope that power exports will increase, ISNA reported.

Fuel prices for electricity export are determined in accordance with petrochemical feedstock prices, Houshang Falahatian stated. "Power export will increase on account of private sector participation in electricity export."

Private firms can now enter the power sector as fuel prices for power plants wanting to export have been determined, he further added.

Iran exports 12 billion kWh of electricity per annum. The country's electricity network is linked to seven neighboring states. It exports power to Pakistan, Turkey, Iraq and Afghanistan, yet it imports from Azerbaijan and Turkmenistan. There are also swap arrangements between Iran and Armenia.