Plan to Diversify Gas Market in Persian Gulf

Plan to Diversify Gas  Market in Persian GulfPlan to Diversify Gas  Market in Persian Gulf

Iran sees a promising market in Kuwait and the UAE for natural gas export in the post-sanctions era, managing director of the National Iranian Gas Export Company said on Monday.

"Gas export to regional countries, particularly the Persian Gulf states, is the top priority of NIGEC in the post-sanctions period," Alireza Kameli was quoted as saying by Mehr News Agency.

The official added that Tehran has engaged in negotiations with Abu Dhabi and Kuwait City since reaching an agreement with the six world powers in July over its nuclear program.

Nearly all of Iran's gas exports go to Turkey, Armenia and Azerbaijan; Ankara receives more than 90% of Iran's supplies while Yerevan and Baku import around 6% and 3% of Iran’s natural gas exports, respectively, under swap agreements.

Iran wants to diversify its gas exports, which are concentrated in the north by reaching out to Persian Gulf countries in the south. The move comes as Iran is planning to boost gas production capacity from 420 million cubic meters per day at present to 1 billion cubic meters a day in 2017 and to 1.2 bcm/d by 2020.

Gas talks with the two Persian Gulf neighbors gained momentum in November, when Iranian officials said they were engaged in talks with several Emirati companies to sell gas.

In addition, two scenarios for gas export to Kuwait are on the table, including supply via a pipeline through the Iraqi city of Basra or through Bandar Genaveh in Bushehr Province.

Iran is also planning to cash in on Saudi Arabia's untapped petrochemical production capacity, as the kingdom's petrochemical complex is running at half its capacity because of a shortage of feedstock.

According to officials, Riyadh needs to import gas from Iran or Qatar to justify its massive $100 billion investment in the petrochemical sector.

But Iraq is poised to receive Iran's gas ahead of other neighboring Arab states. Tehran finalized a deal with Baghdad in November to supply 20-35 mcm/d of gas to three power plants in Basra near the Iranian border, with the volume expected to reach 45-60 mcm/d, once gas supply to the Iraqi capital goes underway.

Kameli added that Oman has long been on Iran's radar for gas export.

"Gas talks with Oman go back to more than 10 years ago … An [initial] agreement was signed in early 2014 to supply 28 mcm/d of gas to Oman through an underwater pipeline," he said.

The tiny Arab country wants Iran's gas to meet the demand of its 3.6 million population, while a portion of supplies is planned to be used as feedstock to produce liquefied natural gas.

According to the latest developments concerning Tehran and Muscat's gas deal, a 48-inch pipeline will be laid up from Jask Port in southern Iran to deliver gas to Oman in the Arabian Peninsula.

Iran is reportedly the fourth biggest producer and the fourth biggest consumer of natural gas in the world. It produced 173 bcm of gas in 2014, the most after the US, Russia and neighboring Qatar.