South Korea on Monday took an important step toward strengthening its foothold in Iran's resurging gas industry, as it aims to become a key economic partner of the Middle East nation in the post-sanctions era.
After lengthy negotiations between National Iranian Gas Company and Korea Gas Corporation (KOGAS), the two sides signed a memorandum of understanding that paves the way for the state-run Korean company to implement mega projects in Iran's gas sector.
Azizollah Ramezani, NIGC's director for international affairs, made the announcement on the sidelines of a ceremony to sign the MoU, ISNA reported.
The official noted that the agreement calls for the construction of Iran Gas Trunklines (IGAT 9 and 11) as well as laying a subsea pipeline through the Persian Gulf to supply gas to Oman on the Arabian Peninsula.
Pointing to KOGAS 's extensive experience in undertaking gas initiatives, Ramezani added that the concluded agreement include conducting research and development for mini liquefied natural gas projects as well as LNG and compressed natural gas projects.
"Plans have been made to promote collaboration with KOGAS in the field of optimizing energy consumption in compressor stations, refineries and other NIGC installations," he said, noting that such agreements will definitely pave the way for further cooperation.
"Based on the terms of the signed memorandum, joint workgroups will be formed and technical meetings will be held with the aim of expanding bilateral cooperation in many fields."
According to Ramezani, the agreement is valid for one year and will be extended by mutual consent.
Oman Subsea Pipeline
Alireza Kameli, managing director of National Iranian Gas Export Company, told Shana on Monday that as feasibility studies for laying a subsea pipeline that will connect Iran's gas facilities in the south to Oman are coming to an end, the two states will embark on construction operations with a single contractor as soon as possible.
"As part of recent agreements with the South Korean gas company, the enterprise has shown interest in undertaking the mega project," he said.
The 260-km pipeline project is expected to be laid by 2019 at a cost of $1 billion. It will supply 28 mcm/d of natural gas (10 billion cubic meters a year) from Iran to Oman under a 25-year contract.
The small 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.
Iran has been pushing for the gas contract to capitalize on Oman's untapped LNG production capacity, which officials estimate to be 2.5-3 million tons a year.
Tehran is planning to expand a foothold in the Middle East's promising energy markets in the post-sanctions era, including Kuwait, the UAE and Saudi Arabia.
Nearly all of Iran's gas exports go to Turkey, Armenia and Azerbaijan, with Ankara receiving more than 90% of Iranian supplies, and Yerevan and Baku importing around 6% and 3% of Iran’s natural gas exports, respectively, under swap agreements.
Willingness to Be a Major Player
According to CEO of KOGAS Lee Seung-hoon, Seoul and Tehran will cooperate in the development of gas projects via technology transfer and investment in joint ventures.
KOGAS is willing to play a major role in the Persian Gulf country's natural gas plans.
"KOGAS managed to cover the whole South Korea with a single gas pipeline," Lee said, noting that the company has successfully implemented gas trunkline projects, which are designed for natural gas transmission from production areas to consumption points, not only in South Korea but also in Mexico, Indonesia, Mozambique and Peru.
The Korean official believes that NIGC can rely on KOGAS's 35-year-old experience in constructing Iran Gas Trunkline (IGAT 9 and 11).
"We are also willing and capable of laying the subsea pipeline to transfer Iran's gas to its neighboring Arab state," he said.
KOGAS was incorporated by the South Korean government in 1983. Since its founding, it has grown to become the world's largest LNG importer. It imports LNG from around the world and supplies it to power generation plants and gas utility companies throughout the country.
The corporation is actively developing new technologies, expanding the scope of businesses and participating in foreign projects to realize its goal of becoming a leading integrated energy company in the world.
Peripheral Deals
NIGC and South Korean operator SK Telecom signed an MoU on building smart metering devices.
Smart meters are used for tracking gas and electricity consumption more accurately, compared to conventional meters, by digitally sending meter readings to energy suppliers.
The MoU was signed by Ramezani and the executive director of SK Telecom on Sunday.
SK Telecom is a wireless telecommunications operator and one of South Korea's largest conglomerates.
In addition, Iran Power Generation, Distribution and Transmission Company held talks with a delegation of South Korea Electric Power Corporation on an agreement for upgrading Iran's power infrastructure and reducing energy wastage. The two sides are expected to sign an MoU on Tuesday.
