NIGC Seeks Market Expansion in Cooperation With Gazprom

Russia and Iran, two countries with the largest natural gas reserves, can work together to extend their foothold in the global gas market, Hamidreza Araqi, managing director of the National Iranian Gas Company said.

He made the statement after signing a preliminary agreement with Russia's gas giant Gazprom on Tuesday to expand cooperation in wide-ranging areas including gas trade, research and development and production and implementation of joint projects, Shana reported.

"It is often perceived that Iran and Russia are gas rivals, but the two countries can create and expand a joint gas market using their facilities," Araqi said.

Russia (48 trillion cubic meters) and Iran (33 trillion cubic meters) together hold more than 40% of the world's global gas reserves, according to BP.

"We can pursue mutual interests in tandem with Gazprom," Araqi  added, hoping that the initial agreement will translate into contracts in the near future.

"We will hold meetings in the next two months to finalize the agreements."

According to Araqi, Iran's gas output is higher than its domestic demand and "we can boost exports by improving energy efficiency, using the expertise from Gazprom."

Iran has boosted its natural gas production in recent years following the launch of several projects in South Pars, the giant gas field its shares with Qatar in the Persian Gulf.

However the country is struggling to reduce unacceptably high domestic gas consumption and boost exports. Most of the gas output is used for heating and electricity production.

The NIGC chief also pointed to Iran's interest in swap operations and build gas storage facilities in cooperation with Gazprom.

"Iran's gas production capacity will reach 1 billion cubic meters per day from the current 700 million cubic meters. We will need new infrastructure to ensure stable gas supplies in the cold season," he said.

Iran currently draws around 460 mcm/d from South Pars and plans to increase the volume to 540 mcm/d by next March.

  Subject to Mutual Interest

Alexander Medvedev, deputy chief executive of Gazprom said his company is ready to play a role in Iran's gas supply chain.

"We are keen to take part in exploration and production projects, LNG (liquefied natural gas) production and gas exports" including a plan to supply Iran's gas to India.

Medvedev echoed Araqi's stance in implementing gas storage projects. He said Russia's hydrocarbon storage capacity is 60 billion cubic meters, adding that his company has built gas storage tanks in other countries with a capacity of 5 billion cubic meters.

However, Medvedev stressed that cooperation with Iran is conditional on mutual interest.

"We welcome presence in major gas projects, even if they're complicated. But any collaboration should meet the interests of both sides, otherwise negotiations will fail," he said without elaboration.

He also said that Gazprom is ready to operate in Iran's energy market alongside European majors. "We are ready to work with other companies such as Shell and Total. Gazprom can also expand cooperation with  Iran's national gas company."