The growing global gas demand will bring about substantial investments in Iran, despite current conflicts in the region, and the sanctions imposed on Iran’s energy sector, said Seyed Mohammad Hossein Adeli, Secretary General of the Gas Exporting Countries Forum (GECF), in an interview with Gulf Intelligence.
“At this juncture, the world needs Iranian gas. The world needs more gas and more energy, so if contract negotiations are successful, I think investment into the gas and oil sector of Iran will happen and then Iran will be a game changer.” The demand for gas is rising due to economic growth and due to the shift in the energy mix to gas from oil and coal. The share of gas in the next 20 years will increase from around 22% to 25% or 26% and we are more concerned about where the supply will come from, he added. There is also strong gas demand support due to policy changes in Japan; after Fukushima, plans for bringing nuclear power on board again this year and next has been postponed. Demand for gas from India is also rising, as well as from Europe, so even if some customers reduce demand, there are new ones emerging all the time.
The objective of the GECF is to exchange information and data, to be transparent and have a platform for coordination of policies, Adeli said, adding: “Our statute at GECF has no intention of setting prices, quotas or production.”
The forum covers a vast area of member countries responsible for 67% of world gas reserves, 65% of LNG trade and 40% of the pipeline trade. The GECF is not for setting production quotas or coordination of prices. It monitors the market - demand and supply, gas developments in the US, in Australia, in our region and globally, and of course the many geopolitical developments also - all of which are making the gas market very interesting and challenging at this time.
US shale gas production will continue to grow and start to export by around 2016, but exports will be minimal and won’t impact the global market in the first few years. Having said that, production of dry gas will diminish and not be sustainable if the Henry Hub (HH) price remains at current levels of $3.4 per million British Thermal Unit (BTU), compared to last year where it touched $7.4 per million BTU. “I think that in the next 12 months, we will witness some sort of hiking of HH prices in order to sustain production,” Adeli said.
Russia will continue to be a reliable supplier and it will address the financial problems with the EU one way or the other. Europe needs Russian gas and Russia needs European market. Russians will do whatever it takes to show they are a reliable supplier, Adeli stated.
