Iran, Georgia Discuss Natural Gas Export

Ongoing talks to export natural gas to Georgia have resumed and should they yield favorable results, natural gas will be delivered to Georgia through Armenian territory, the managing director of National Iranian Gas Company said.

"Iran is situated in a special region that can transfer its natural gas to different states, one of which is Georgia," Hamidreza Araqi was also quoted as saying by Shana on Saturday. Pointing to major challenges facing the sale of strategic fuel, Araqi noted that although much-needed infrastructures are in place and the price is reasonable, the project cannot be implemented without Armenia's consent.

"To transport gas from Iran to Georgia, export licenses should be obtained from Armenia," he said.

According to the official, serious negotiations are being held among the three states and as soon as they come to an agreement, private companies in Georgia will purchase the natural gas from Iran and the same amount will be swapped to Georgia via Armenia.

Referring to a contract between the Georgian International Energy Corporation and NIGC that was signed last year, Araqi said the deal has not taken effect yet.

Reportedly, NIGC signed a contract to export a total of 40 million cubic meters of gas to the privately-owned Georgian International Energy Corporation under a four-month pilot agreement. Nonetheless, for the contract to be carried out, permission should first be obtained from Armenia that shares borders with both Iran and Georgia.

According to Araqi, based on a short-term preliminary agreement, up to 14 million cubic meters per day of natural gas were expected to be supplied to Georgia for use in its thermal power plants, but it seems that the venture has not proven to be commercially profitable.

Preliminary talks between Tehran and Tbilisi started in January 2016 when Georgian Energy Minister Kakha Kaladze announced his country's interest in buying gas from Iran.

Calling it a win-win deal, Kaladze expressed optimism about the prospect of cooperation with Tehran.

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.

Asked about the possibility of supplying Iran's gas to European markets via Georgia, Araqi ruled out gas exports through pipelines for the time being, but said the export of liquefied natural gas is on the table.

  Increasing Gas Market Share

According to Behzad Babazadeh, NIGC’s director for international affairs, the company is intent on increasing the country’s share in global gas trade while providing domestic petrochemical plants with gas feedstock to produce value-added goods.

“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,” he said.

"NIGC has made concerted efforts to primarily meet domestic gas demand in the past five decades, because of which its role in foreign markets has been marginal."

Babazadeh noted that 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," he said.

Iran (with 34 trillion cubic meters) and Russia (with 32.6 tcm) hold the largest proven gas reserves, according to BP Statistical Review of World Energy.