Tehran Unlikely to Impact Gas Market Soon

Tehran Unlikely to Impact Gas Market SoonTehran Unlikely to Impact Gas Market Soon

As sanctions on Iran end, the nation is eager to enter the global gas market, but its impact is unlikely to be felt anytime soon.

Europe will probably not feel the additional Iranian supply until at least 2030, as the country builds up its infrastructure and forges purchase agreements, according to energy company executives, Bloomberg reported.

Even as Europe seeks to diversify imports away from Russia, Iran still has significant hurdles to overcome before becoming part of the continent’s supply mix.

After a decade of economic sanctions, Iran is cleared to resume international trade at a time when a global oil glut has driven natural gas prices to the lowest since 2010.

The end of restrictions also opens the way for foreign investors to the world’s fourth-largest reserves of crude and biggest deposits of natural gas.

“In this price environment, it will be very difficult to encourage people to take the sort of political risks and the attached costs to it,’’ Andree Stracke, chief commercial officer for origination and gas supply for RWE Supply & Trading GmbH, said in an interview in Vienna. “There’s a long way to go.’’

Data show the Persian Gulf country holds an estimated 34 trillion cubic meters of gas.

“We’re working as fast as we can to get our gas to Europe,” Mohammad Hassan Aboutorabifard, deputy speaker in Iran’s parliament, said in Prague on Friday.

“These are big steps and we’ll need to do a lot of planning and work to achieve tangible results.”

Iran does not have any routes into continental Europe, so building export facilities will be a big part of its ability to compete. The country already has supply partnerships with neighboring countries, including Turkey and Iraq, and is in talks to build a $4.5 billion subsea pipeline to India.

“Once Iran will have the potential to become a net exporter, it will be a question of whether that gas will be piped gas or liquefied natural gas,’’ Reinhard Mitschek, senior vice president of gas transport international at OMV AG, said in Vienna. “That’s an open point.’’

All of this will take about 15 years to sort out, Carlo Malacarne, chief executive officer of Italian gas network operator Snam, said in an interview in Vienna.

Michael Maisinger, head of gas trading at Vattenfall Energy Trading, noted that Iran has enough gas volume to make a difference but that it is too soon to say what will happen.