The scale of Iran’s gas reserves means the country would be able to shift decisively towards exports if sanctions were lifted, a senior official at the National Iranian Gas Company (NIGC) said.
Speaking to Interfax at the World Gas Conference in Paris last week, Azizollah Ramazani, NIGC’s international affairs director, said lifting of sanctions may also allow Iran to reduce its production costs, since it will allow for more competition to supply equipment.
“NIGC is ready to buy equipment from different countries and from different companies, sanctions removal will reduce the time needed to procure the equipment,” said Ramazani.
“Also, we will be able to acquire more advanced technology at lower cost. These factors will influence our projects,” he added. “Capex will be reduced and this affects the price of gas under negotiation for long-term contracts. At present, our cost is more than market rates. It’s not at a level that is reasonable or acceptable.”
“The local gas market is going to be fully covered as 88 percent of the population in Iran has access to natural gas at present,” he said, adding that Iran can now aim for international markets as production is expected to rise. Gas production is currently near 800 million cubic meters per day (mcm/d). The figure is expected to reach 1.2 billion cubic meters per day by 2020.
Regional Priority
Iran has focused for many years on local production and consumption, but now there are plans to expand activities outside Iran provided that sanctions are lifted, said Ramazani. Currently, Iran has nearly 100 mcm/d of gas ready for export, he said. Iran aims to export around 200 mcm/d of gas by 2020.
Iran’s priority for gas export is the regional market as most countries around Iran need gas especially for their power plants. “After that, [we will look at] the European and Asian markets.”
European consumption is more than 500 billion cubic meters per annum and local production from Norway and the Netherlands is going to decrease, so they will need additional gas,” he said. “Iran can play a key role in supplying gas to Europe as they are going to diversify their suppliers,” Ramazani added. Gas production in Iran is more expensive than it should be, said Ramazani, but the country’s proximity to Persian Gulf gas buyers will give it a competitive advantage. “Our competitors might be Azerbaijan or Turkmenistan,” he said. “But they are further away [from Persian Gulf gas buyers]. So our finished cost will be lower.”
