Foreign Funds Vital for Developing Gas Projects 

Foreign Funds Vital for  Developing Gas Projects 
Foreign Funds Vital for  Developing Gas Projects 

Iranian Gas Engineering and Development Company plans to lay 5,000 kilometers of gas pipeline in addition to building 25 gas compressor stations by the end of the sixth five-year development plan (2016-21), the head of IGEDC said on Monday.

"The mega projects are projected to require $15 billion worth of investment. In other words, the most significant priority in post-sanctions era is attracting foreign investment, as funding the plans without using financial resources of external investors will be impossible," Hassan Montazer Torbati was also quoted as saying by Shana.

The official said gas projects with an estimated cost of $400 million are being undertaken and by the end of 2021 new plans worth $340 million will be lined up annually.

"By relying on its domestic financial resources, the company can only cover $100,000 million of the much-needed investment. To achieve the target, IGEDC must attract not only foreign investment but also domestic private sector's financial assistance," he said.

On the effect of sanctions' termination on the company's projects, he added, "Sanctions overshadowed neither pipeline nor compressor station utility production directly as domestic enterprises have been able to meet our projects' needs.

"Oil Turbo Compressor Group and MAPNA group have manufactured the much-needed cutting-edge turbo compressors. It is projected that projects will be completed much more economically in the near future, as banking limitations are removed," he said.

Torbati believes that IGEDC and National Iranian Gas Company should both play a role in financing the projects by reliable investors.

Categorizing the ongoing projects into two groups, he noted that establishing the infrastructure to develop gas export to Iraq tops the priority list, which is about to be completed through the private sector's investment under a build-operate-transfer contract.

The construction of Iran's gas trunklines 9 and 11, stretching from South Pars gas field, off the Persian Gulf coast, to different parts of the country is the next project. The pipe-laying plan across the cities of Damghan, Kiasar, Sari and Neka at an estimated cost of $153 million, approved by the Economic Council, has also been shortlisted for completion by the end of the current Iranian year (March 19).

Underscoring the construction of a natural gas project linking the country's biggest gas field in the southwest, namely South Pars, to Sistan-Baluchestan Province in the southeast, Torbati said supplying gas to Sistan-Baluchestan Province will save $660 million annually.

This is projected to lower diesel and mazut consumption in the province's power plants by 1.4 billion liters and 550 million liters respectively.

"The project, to be completed in two years at an estimated cost of $1.8 billion by private investment and under the BOT business model, calls for laying an approximately 950-kilometer-long pipeline from South Pars to Iranshahr in the province for pumping natural gas to the cities of Zahedan, Zabol, Khash and the port city of Chabahar as well as supplying gas as feedstock to the region's power plants," he said.

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. The country 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.

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.