Preliminary Gas Export Deals With Oman

Preliminary Gas Export Deals With OmanPreliminary Gas Export Deals With Oman

Preliminary agreements have been reached with Oman to transfer Iran's natural gas through a pipeline, the National Iranian Gas Company's managing director said on Sunday.

"To export gas to Oman and probably convert it to liquefied natural gas, a 48-inch pipeline will be laid up to Jask Port in southern Iran," Hamidreza Araqi was quoted as saying by ISNA on the sidelines of the Third Gas Exporting Countries Forum Summit slated for November 23 in Tehran.

"The strategic project will be implemented as soon as Iran's Oil Minister Bijan Namdar Zanganeh and Oman's Oil and Gas Minister Mohammed bin Hamad Al Rumhi finalize it."

Araqi noted that the pipeline will be extended to the Sea of Oman, but the final destination is yet to be announced by the Omani contractor.

According to the official, the total investment required to undertake the project has not been specified yet.

Underscoring the prospect of selling gas to neighboring states via pipeline, he added, "Thirty million cubic meters of natural gas are being exported to Turkey every day. Furthermore, an agreement was concluded with Iraq, which will be implemented by NIGC."

Araqi said gas supply to Basra will begin in 18 months, with export to the Iraqi capital expected by early 2016.

 As per the contract signed on November 11, Iran will supply 20-35 million cubic meters of gas per day to three power plants in the southern Iraqi city of Basra near the Iranian border. The volume will reach 45-60 mcm/d, once gas supply to Baghdad starts.

Iran and Iraq signed a draft deal in 2013, which is estimated to be worth $4-6 billion.

NIOC will supply 7 mcm/d of natural gas to Basra within the first six months of the contract and 14-18 mcm/d in the following year, with exports expected to reach 20-35 mcm/d in the third year.

Gas supply to Iraq is estimated to total 40 billion cubic meters over six years.

Araqi noted that the untapped potential in exporting gas to neighboring countries through the Persian Gulf can raise Iran's gas export ceiling up to100 mcm/d, as they are in dire need of gas as a cheap and clean fuel.

"We have already signed contracts with Pakistan. Besides, plans have been made to commence serious negotiations with Afghanistan, whose local companies have shown interest in importing gas from Iran," he said.

Underlining LNG production in Oman, the official said, "Negotiations are underway to convert natural gas to LNG in Oman. However, the controversy is that whether Iran should be entitled to sell the produced LNG or Oman."

Iranian oil officials are also holding talks with senior representatives from Azerbaijan about swap deals for gas.

Earlier this month, the State Oil Company of Azerbaijan Republic said it is considering the possibility of transiting Russian gas to Iran, based on which Russia could deliver gas to Iran’s north and receive the same volume of gas from Iran’s south through the swap deal.

Iran hopes to raise gas export to 150-300 million cubic meters per day by 2021.

"Plans have been made to supply all Iranian households with natural gas by mid-2017," Zanganeh said.

The oil minister added that the first priority after confirming gas production capacity is to provide 97% of the population with gas and the rest are beyond reach as they live a nomadic life.

"Fulfillment of such a goal, which needs an investment of $4.5 billion, would be a great achievement," he said.

"Around 17,000 small towns and villages now have access to natural gas, while households in 3,000 more villages are in line to receive gas." 

Zanganeh stressed that all cities should be linked to the national gas network by the end of the sixth five-year economic development plan (2016–21).