Iran Gas Company Shifting Focus to Int’l Markets

The National Iranian Gas Company is intent on raising the country’s share in global gas trade while providing domestic petrochemical plants with gas feedstock to produce value-added goods, NIGC’s director for international affairs said.

“Iran’s share in the global natural gas market should rise from about 1% to 10% by 2025 based on a shift in policy that calls for increasing gas exports,” Behzad Babazadeh was quoted as saying by IRNA last week.

“The NIGC has made concerted efforts to primarily meet domestic gas demand in the past five decades which is why its role in foreign markets has been marginal,” Babazadeh said.

He said officials and stakeholders in the gas market are now leaning toward signing contracts with international energy companies to boost gas production capacity.

Tehran is following through with the first such contract with French energy giant Total to develop Phase 11 of the South Pars Gas Field in the Persian Gulf. The agreement, which also includes China’s state-run oil and gas company, CNPC, is expected to be finalized in a matter of weeks.

According to the official, Iran currently exports natural gas via pipelines to three neighboring states, namely Turkey, Armenia and Azerbaijan. Ankara receives more than 90% of the gas exports under a long-term contract, and Yerevan and Baku sporadically receive the fuel under swap agreements.

Babazadeh noted that talks are underway for a gas supply deal with privately-owned Georgian International Energy Corporation.

“This will be among the NIGC’s first new international gas deals. We will initially sign a short-term supply deal to see how it works out.”

According to reports, an agreement has yet to be reached with Yerevan to sell Iranian gas to Georgia through Armenia.

According to Mariam Valishvili, Georgia’s deputy energy minister, Iran’s natural gas can be sent to Georgia through Armenia or Azerbaijan, as both countries have the infrastructure.

--- Separate Contract

On the prospect of increasing natural gas export to Armenia to 2.5 million cubic meters per day, Babazadeh said, “They receive 1 mcm/d from Iran in exchange for electricity exports. Nonetheless, to supply them with more gas, a separate contract should be signed.”

The official added that negotiations over financial terms of the deal have not come to fruition yet as “Iran’s gas prices are not as low as Russia’s.”

Pointing to Turkey’s proposal to transfer Iran’s gas to the European Union via a pipeline from its territory, he said, “We are willing to sign a trilateral agreement on condition that the gas is not used in Turkey and be directly transferred to Europe. Talks are going on with the Turkish side.”

---- Monthly Payment

On the supply of natural gas to Iraq that commenced last week, Babazadeh said the payments will be made via a letter of credit on a monthly basis and the NIGC will directly receive the money.

Gas exports to Iraq have begun at a rate of 7 million cubic meters per day and will eventually increase to 18 mcm/d in two years. Iran can raise the flow to as much as 35 mcm/d if there is a request from Baghdad. 

Iran’s gas will feed three Iraqi power plants—Rumaila, Shatt al-Basra and al-Najibiyah— in Baghdad to reduce lengthy outages and the same amount of gas will be delivered to Basra power plant in 6 months, according to government reports.

On the subject of priorities, Babazadeh noted, “Converting natural gas to liquefied natural gas (LNG) with the help of foreign investment and exporting the fuel to the Far East is on the agenda.”

The official said selling natural gas to domestic petrochemical complexes as feedstock is of great importance as long as the prices are reasonable and the companies pay their bills on time.