Gas Export Rise Depends on Electricity Development

Gas Export Rise Depends on Electricity Development
Gas Export Rise Depends on Electricity Development

The rise in gas export to Armenia depends on the construction of a new electricity transmission line between the two states, managing director of National Iranian Gas Export Company said on Sunday.

"Gas export to the northwestern neighbor can witness a fivefold rise as soon as the power project is developed," Alireza Kameli was quoted as saying by Mehr News Agency.

Pointing to the volume of gas export to Armenia, Kameli said 1 million cubic meters of gas are exported to the neighboring state per day on average in exchange for electricity.  

In 2004, Tehran signed a 20-year contract with Yerevan to export gas to its northern neighbor.

Based on the agreement, Iran's natural gas is used by Armenian power plants to generate electricity, which is then exported to Iran. The cross-border gas pipeline was commissioned in 2007 and exports began in mid 2009.

According to the official, Iran can export 5 mcm of gas per day to Armenia, but the northwestern neighbor cannot take advantage of the pipeline's untapped capacity due to lack of infrastructure for gas refining and storage.

"Tehran imports 3 kilowatt-hours of electricity from Yerevan in exchange for 1 cubic meter of natural gas," Kameli said, stressing that the terms of the present agreement will be revised in the near future.

Stressing the need for developing much-needed infrastructures in Armenia to boost gas export, the official said, “The second phase of the [electricity-gas barter] agreement between the two sides urges Armenia to take serious measures to complete the third power transmission line, for which it signed an electricity supply contract, valued at $120 million, with Iran.

Based on the agreement, Export Development Bank of Iran, as the country's exim (export-import) bank, funds about $95 million of the entire cost.

"Construction operation of the 400-kilowatt double circuit power transmission line has commenced and as soon as it goes on stream, gas export to this country will experience a drastic rise. Interestingly, the whole project is being undertaken by Iranian experts," he said.

It is predicted that upon the completion of the third power transmission network, Iran-Armenia electricity exchange, currently standing at 300 megawatts, will increase by 1,000 MW.

The new electricity transmission line has other advantages, the most important of which is connecting Iran's national power grid to that of Russia and Georgia, making it possible to transmit electricity to Caucasian states.

  Gas Delivery to Georgia

Asked about the probable gas delivery to European countries via Georgia, Kameli denied gas exports through pipelines but said LNG exports are possible.

Hamidreza Araqi, the head of National Iranian Gas Company, said last month that supplying gas via pipelines of large diameters is justified for a distance of up to 3,000 kilometers.

Officials in the past few months have stressed that gas export through pipelines is not a priority.

"What we are negotiating is to deliver gas to Georgia's power plants and supply to Europe is not part of our talks," Kameli said.

According to the official, the volume of exports to Georgia will be 300-500 million cubic feet per day.

Iran is the fourth biggest 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, making it the holder of the world's largest proven reserves.

Iran exports natural gas via pipelines to three neighboring countries, namely Turkey, Armenia and Azerbaijan. Ankara receives more than 90% of Iran’s gas exports under a long-term contract, and Yerevan and Baku receive around 6% and 3% of Iran’s natural gas exports, respectively, under swap agreements.

If the plan becomes a reality, Georgia would be the last Caucasian state, after Armenia and Azerbaijan, to import gas from Iran.

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

The country is the largest exporter and importer of electricity in the Middle East and exports electricity to Armenia, Pakistan, Turkey, Iraq and Afghanistan.