MP Rules Out Gas Exports to Europe

MP Rules Out  Gas Exports to EuropeMP Rules Out  Gas Exports to Europe

Gas exports to neighboring countries are a priority and Iran now has no plans to export gas to members of the European Union, member of the parliament's energy committee said, Icana reported Monday.

"Gas exports to Europe will be on the cards only if the EU lifts its sanctions against Iran," Seyyed Mousa Mousavi said, stressing "mutual understanding" as the cornerstone of any future negotiations on energy trade.

The official ruled out gas trade with Europe after a report by AFP last week said the EU is interested in importing gas from Iran in the future to end dependence on Russian natural gas amid hopes for a nuclear deal that would lift trade restrictions against Iran.

The report also said that Iran "has always been a priority for Europe as a gas supply source," but international sanctions imposed on the country proved a stumbling block on the way of cooperation between the two sides in the energy sector.

Russia is currently Europe's biggest supplier of natural gas, meeting a third of its demand worth $80 billion a year. The EU has imposed sanctions on Moscow over the conflict in Ukraine, increasing the need for gas from elsewhere.

After eight days of marathon talks on Tehran's nuclear program in Lausanne, Switzerland, Iran and the P5+1 (Britain, China, France, Russia, the US plus Germany) reached a framework agreement on April 2 that calls for lifting all trade sanctions against Iran. The details of the agreement are to be finalized by a June 30 deadline.

Mousavi said Iran will continue gas exports to Turkey in the present situation and is ready to increase its output. "Gas exports to Iraq and Oman is on the agenda and plans call for commencing gas supply to Iraq in the near future."

He also said Iran has done its part of laying the Iran-Pakistan (IP) pipeline and it is now up to the southeastern neighbor to uphold its own end of the bargain and accelerate construction. So far about 80 percent of the pipe-laying on the Iranian side of the border (1,100km from a total 1,400km) has been completed. According to published reports, a $3 billion contract was slated to be signed on Monday with China to build the so-called Peace Pipeline inside Pakistan territory.

  LNG A Viable Option

According to the National Iranian Gas Company (NIGC)'s estimations, "Iran will reach gas production peak by 2016," due to a projected increase in production capacity as well as output, Alireza Kameli, managing director of the NIGC told the Persian daily, Forsat-e-Emruz.

Gas export to Europe via the two [onshore] designated routes is feasible, however, transferring it through pipeline is not economically viable, Kameli said, adding that exporting it in the form of liquefied natural gas (LNG) would be the viable option.

The most feasible route for Iranian gas to Europe would be via Turkey, already a customer, although the existing Tabriz-Ankara pipeline is not big enough for major exports.

Investors in Europe, as well as the European Commission, favor the cheaper, and politically less controversial, option of importing Iranian gas to the EU via Turkey through extended pipelines that already exist or are currently being developed.

"Gas export to Europe would take five years at the least," the senior gas official said.

Analysts and energy specialists often assert that Iran is not capable of exporting gas to Europe in the near future because it is incapable of fully meeting the gas demand of its own domestic industries and power plants, Hassan Khosrojerdi, head of the Iranian Oil, Gas and Petrochemical Products Exporters' Association said.

Iran would need to increase production from its joint gas fields should it plan to export gas, but it lacks the much-needed heavy investments to raise production in the joint fields. "Gas export could become feasible if western companies invest in Iranian fields."

Iran should draw on its regional proximity and expand gas infrastructure to facilitate exports to neighboring countries, Ali Shams Ardakani, head of the energy commission of the Iran Chamber of Commerce, Industries and Mines, said. The well-known energy expert stressed that the govrnment, however, should "only decide policy and give direction and hand over all else to the private sector."

Iran has the world's second largest gas reserves after Russia. It holds 17% of the world's proved natural gas reserves and more than one-third of OPEC's reserves. However, the vast majority of Iran's gas reserves are undeveloped. International sanctions continue to hurt much-needed foreign investment in Iran's energy sector, limiting the technology and expertise for expanding the capacity at oil and natural gas fields and check declines in output.

Notwithstanding its abundant reserves, the country is still in its infancy and a minor and strictly regional exporter of natural gas via pipelines to three neighboring countries – Turkey, Armenia, and Azerbaijan. Iran supplies less than one percent of global natural gas exports, according to the US Energy Information Administration.