Tehran, Moscow in Gas Storage Talks

Tehran, Moscow in Gas Storage Talks
Tehran, Moscow in Gas Storage Talks

Iran has started negotiations to build natural gas storage facilities with Russia, but the two sides have yet to reach an agreement, deputy oil minister revealed on Friday.

"Russians have been offered a complete chain of gas storage operations (including exploration, construction and storage) in Iran," Hamidreza Araqi was quoted as saying by IRNA.

"Plans to cooperate with Russia on expanding gas storage infrastructure comes as Moscow buys and stores Iranian gas in its underground storage facilities and sells the same gas to Tehran during the cold season."

With two major natural gas storage facilities, Iran has the fifth biggest gas storage capacity in the world.

Shourijeh underground facility in Sarakhs in Khorasan Razavi Province will have the capacity to hold 4.6 billion cubic meters of natural gas once the development of all of its phases are completed. Sarajeh facility in Qom can also store 1.2 billion cubic meters of gas in its first phase and 3.3 billion cubic meters in the second.

Tehran and Moscow's ongoing energy talks over the past few months continued during a visit by Russia's President Vladimir Putin and Energy Minister Alexander Novak to the Iranian capital earlier this week for the Third Summit of the Gas Exporting Countries Forum.

During a two-day trip to the Iranian capital last month at the head of a 40-strong Russian trade delegation, Novak said Tehran and Moscow would invest up to $40 billion in joint mid-term projects. Russia's state-owned Gazprom has also reached an initial agreement to cooperate in a bevy of gas projects in Iran, Araqi said without elaboration.

But speculations suggest that a gas storage project would be the likeliest deal with the Russian major in the near future.

With an expected boost in gas output from South Pars, the country's biggest gas field in the Persian Gulf and rising demand for natural gas in winter, Iran is fast-tracking the development of its gas storage projects.

It currently draws around 600 million cubic meters of gas a day from the southern reservoirs, but the volume is expected to reach 730 mcm/d when all South Pars phases become operational by mid-2016.

Officials say gas production capacity is expected to rise by 100 mcm/d by March 2016. President Hassan Rouhani said this week that gas output will surpass 1 billion cubic meters per day in two years. A long-term plan calls for raising natural gas output to 1.2 bcm/d by 2025.

  Pipe-Laying Projects

Araqi said Russian firms have also expressed interest in laying gas pipelines in Iran, but the finance for these projects is the biggest issue.

The 300-kilometer gas pipeline plan from Iranshahr to the port city of Chabahar in southern Sistan-Baluchestan Province is among the most attractive pipe-laying projects for Russians.

Tehran currently exports natural gas via pipelines to three neighboring states, namely Turkey, Armenia and Azerbaijan, and imports Turkmen gas.

Ankara receives more than 90% of Iran’s gas exports under a long-term contract, with Yerevan and Baku receiving around 6% and 3% of Iran’s natural gas exports, respectively, under swap agreements.

Iran is the fourth biggest oil producer and the fourth biggest consumer of natural gas in the world. It produced 173 billion cubic meters of gas in 2014, the most after the United States, Russia and neighboring Qatar.

Data show the Persian Gulf country holds an estimated 33 trillion cubic meters of gas, the world's second largest proven reserves after Russia.