Gas-to-Electricity Plans Gaining Momentum

Gas-to-Electricity Plans Gaining MomentumGas-to-Electricity Plans Gaining Momentum

Five domestic firms are in talks with National Iranian Gas Export Company to use natural gas for production and export of electricity, NIGEC's executive director said on Wednesday.

"Preliminary agreements have been reached with five [unnamed] companies for electricity generation from natural gas," Alireza Kameli was quoted as saying by Shana.

However, these companies must get the approval of Iran Power Generation, Distribution and Transmission Company (Tavanir) before they embark on power production and export.

He added that to build gas-fueled power plants, the companies should devise a plan that specifies the construction site, finance and economic viability of their projects.

The global slump in oil and gas prices has spurred the Iranian government to make better use of its massive hydrocarbon reserves, with one increasingly popular scenario being electricity generation using natural gas.

Oil, an irreplaceable source of income for Tehran, has collapsed to $30 per barrel from $115-a-barrel high in mid-2014. A similar misfortune is grappling with gas prices, which have suffered a 44% decline, falling from 45 cents per cubic meters to 25 cents.

With an estimated 33 trillion cubic meters of gas reserves, Iran holds the world's second-largest gas reserves after Russia.

But the Persian Gulf state is selling its abundant natural gas for cheap and experts have repeatedly called for increasing value added by converting gas to more valuable products such as liquefied petroleum gas or using electricity as feedstock for power generation.

Iran’s electricity industry ranks 14th in the world and first in the Middle East in terms of electricity generation with an installed power generation capacity of 74,000 megawatts.

According to Bahram Nezamolmolki, a senior official at the Energy Ministry, revenues generated by electricity export are more sustainable than those of oil and gas, because power prices are less dependent on oil and gas prices in the global markets.