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Plans for LNG Production From APG

Plans for LNG  Production From APGPlans for LNG  Production From APG

Plans have been proposed by private investors for production of electricity and liquefied natural gas (LNG) by using associated petroleum gas (APG) as feedstock, director of investments at the National Iranian Oil Company (NIGC) said.

"NIGC is assessing several propositions that call for producing APG-fuelled LNG, while one private investor has proposed power generation via APG," Ali Kardar was quoted by Fars news agency as saying on Monday.

Thus, the oil ministry invited private investors to offer plans for generating higher value added from APG. According to published reports, around 25 million cubic meters per day of APG – or approximately $4 billion a year – is burned to waste in Iran. The amount is approximately equal to annual output of one South Pars phase.

APG, or associated gas, is a form of natural gas which is found with deposits of petroleum. It is often released as a waste product from the petroleum extraction industry. When it is burnt off in gas flares, it is referred to as flare gas.

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.

Kardar said the energy ministry has agreed to pay four cents for every kilowatt-hour of electricity generated via APG, but it currently lacks the budget. He added that the energy ministry should fund these projects from its electricity exports revenues.

Short on budget, the energy ministry is unlikely to offer higher prices for APG-fuelled electricity, the official said. However, he hoped the government would approve a bill in the near future to mandate the purchase of electricity generated by APG.

Kardar also said the energy ministry can buy this type of electricity for exports, but it has yet to make a purchase due to "instability of power generation" in APG-fuelled plants.

He said power plants that use APG as feedstock are comparatively small and supply of feedstock to such plants could fluctuate, and that is why the energy ministry has not started to buy electricity from such plants.

Financialtribune.com