Iran needs $100 billion to rebuild its gas industry and has met with European energy giants as an end to decades of international sanctions looms, according to a senior energy official.
“We welcome and appreciate investment by companies; we welcome new technology,” Bloomberg quoted Azizollah Ramazani, international affairs director at the National Iranian Gas Company, as saying in an interview in Paris. “During the last 18 months we have had many discussions with foreign companies.”
While commodity markets fixate on a return of Iranian oil, the importance of gas in the longer term was underlined Wednesday as BP Plc data showed the country held its position as the nation with the largest proven reserves of the fuel after snatching the crown from Russia in 2011.
Deputy oil minister Hamid Reza Araghi met with international companies at the World Gas Conference held on June 1-5 in Paris, Ramazani said, adding that half of the $100 billion that Iran requires will need to come from foreign producers.
“In Paris, we met a lot of companies and they were very eager to have negotiations,” primarily from Europe, Ramazani said. The prospect of renewed fossil-fuel supplies from Iran is one of the great unknowns for global energy markets already shaken by surging US shale output and Saudi Arabia’s decision to keep pumping oil even as prices collapsed.
Infinite Supply
If a final agreement on Iran’s nuclear program is reached by the June 30 deadline and sanctions eased, Iran plans to increase gas exports sevenfold to 200 million cubic meters a day in four years, said Ramazani. It wants to raise production to 1.2 billion cubic meters a day in five years, from 800 million now, he said.
That would only add to new supplies arriving from the US and Australia later this year, and East Africa by the end of the decade, according to Prabhat Singh, marketing director of GAIL India Ltd., one of the world’s biggest gas importers.
“It’ll be like an infinite supply source being added to the huge gas supply already coming from the US,” Singh said in an interview on June 3 in Paris. “That will keep gas prices in check for many years.”
Iran has plenty of room to increase production. Even though it has slightly larger reserves than Russia, it produced less than one-third of the gas in 2014, BP data show.
Selling gas abroad will be more challenging. Iran has just one half-built LNG export plant, giving few quick routes to export. “Even with the lifting of sanctions, everything is against exports to the world market, either to Europe as pipeline gas or LNG,” Jonathan Stern, head of the Oxford Institute for Energy Studies’ natural-gas program, said.
Iran has its eyes on a longer-term prize and sees gas as key for nations seeking both cheaper and cleaner energy.
“Natural gas will be the main fuel in the next 20 to 30 years,” Ramazani said. “Coal will be replaced by natural gas and natural gas will be the second most used fuel after oil.”
Iran sits on the world's largest gas reserves, according to the latest statistics compiled by BP. However, the vast majority of Iran's gas reserves are undeveloped.
