Work Commences on 950-Km Sistan Gas Pipeline

Work Commences on  950-Km Sistan Gas PipelineWork Commences on  950-Km Sistan Gas Pipeline

The construction of a natural gas project linking the country's biggest gas field in the southwest, namely South Pars, to Sistan-Baluchestan Province in the southeast was launched on Monday in a ceremony attended by Oil Minister Bijan Namdar Zanganeh and several high-ranking government officials.

The project calls for laying an approximately 950-kilometer-long pipeline from South Pars to Iranshahr County in the province for pumping natural gas to the cities of Zahedan, Zabol, Khash and the port city of Chabahar as well as supplying gas as feedstock to the region's power plants, Mehr News Agency reported.

The development project is slated to be completed in two years at an estimated cost of $1.8 billion by private investment and under the build-operate-transfer, or BOT business model. Zanganeh underlined the gas delivery project as one of the country's biggest gas contracts and said such an investment is unprecedented the field of energy.

"This is the biggest project to be carried out in Sistan-Baluchestan in recent history," he added. The minister also said gas production capacity increased by 120 million cubic meters per day by March 2015 following the launch of several SP phases despite financial constraints, and hoped to ramp up output this year to meet the country's rising gas demand during the cold season. South Pars is the world's largest gas field, shared between Iran and Qatar, covering an area of 3,700 square kilometers of Iran's territorial waters in the Persian Gulf. It adjoins Qatar’s North Field, which measures 6,000 square kilometers. The minister also lamented the large number of delayed projects across the country and called for fast-tracking the construction of a gas-to-propylene complex in Iranshahr launched in 2014.

The petrochemical unit is expected to create 10,000 jobs and become a major source of revenue in one of the country's least developed regions in the past few decades.  According to provincial officials, the province ranked last among the country’s 31 provinces in the past few decades in terms of development. But the government is trying to turn things around by implementing new projects such as creating Chabahar Free Trade-Industrial Zone.

  Saving Costs

Supplying gas to Sistan-Baluchestan Province will save $660 million annually, Hassan Montazer Torbati, the head of Iranian Gas Engineering and Development Company, said on the sidelines of the Monday ceremony.

The measure is projected to lower diesel and mazut consumption in the province's power plants by 1.4 billion liters and 550 million liters respectively. The government has instructed power plants and refineries to use gas instead of more polluting feedstock such as mazut due to abundance of gas resources in Iran and the rise in SP gas extraction.

Burning gas as feedstock will also make room for generating revenue from the export of surplus diesel and mazut.

  Nationwide Coverage

Gas delivery to a total of 3,800 small towns and villages across Iran is now underway and 5,200 more villages are in line to receive gas in the near future.

Around $4.7 billion of funds to supply gas to more than six million Iranians deprived of this fossil fuel is planned to be funded from Note 2(G) of the Budget Law.

The note establishes the investment framework for the Oil Ministry, allowing it to invest up to $100 billion in oil and gas projects to create new opportunities for the private sector and boost privatization. Nearly 90% of the country have access to gas and the figure will reach 97% upon the completion of major gas projects within the next few years, according to government officials. Zanganeh said more than $667 million have been invested in expanding the natural gas network so far this year while gas projects are slated to receive an additional $1.6 billion in funds in the current Iranian year (ending March 19, 2016).

  Gas Exports

"Iran can provide the infrastructure for gas export to eastern neighbor Pakistan through Sistan-Baluchestan within a year," he said.

Iran and Pakistan started a major $7.5 billion gas pipeline project, also known as the Peace Pipeline, in March 2013, but the plan hit quicksand due to sanctions and trade restrictions against Tehran, while cash-strapped Islamabad has struggled to raise the money to lay the pipeline on its side. Zanganeh noted that Iran is interested in conducting fuel trades with Afghanistan through its eastern borders.