Gas Industry Funded Through 2017

Gas Industry Funded Through 2017Gas Industry Funded Through 2017

This year's budget has stipulated $17 billion through Note 2(G), for the gas sector until 2017, and then new arrangements need to be devised for next years, head of the investment committee of the National Iranian Gas Company (NIGC), Asghar Soheilipour, was quoted by Neco News as saying on Tuesday.

Out of the $17 billion, $10 billion will be allocated for construction of the Iran Gas Trunkline (IGAT), namely IGAT6, IGAT9, and IGAT11, stretching from South Pars gas field, off the Persian Gulf coast, to different regions across the country. The remaining $7 billion will be allotted to other natural gas supply projects.

Pipelines transferring gas from South Pars field were ultimately classified as upstream projects as insisted by the oil ministry. As a result, the parliament's economic committee agreed to apportion 10.3 billion dollars for implementation of those projects.

"So far $560 million is provided, and the rest will be received over the next few years," Soheilipour said. As the NIGC is seeking finance for its projects, it is now holding talks with foreign companies that have expressed interest in investing in Iranian gas industry, he noted.

The Iranian gas industry requires a total of $30 billion to carry out its current development projects within the Sixth Five-Year Economic Development Plan (2016-2021), said Soheilipour.

Note 2(G) establishes the investment framework for the oil ministry, allowing it to invest up to $100 billion in oil and gas projects in line with Article 44 of Iran's Constitution to help open new opportunities for the private sector and boost privatization.

Despite having the second largest gas reserves in the world, the vast majority of Iran's reserves are undeveloped.

South Pars is the world's largest gas field, shared between Iran and Qatar, covering an area of 3,700 square kilometers of Iran's territorial waters in the Persian Gulf. It adjoins Qatar’s North Field, which measures 6,000 square kilometers. It has a capacity of producing 820 million cubic meters (mcm) and 1 mcm of gas and gas condensates per day, respectively.

  Energy Talks With Japan,

S. Korea Companies

Talks have got underway with three major oil and gas companies from Japan and South Korea despite the sanctions, Mehr news agency reported Tuesday.

Speaking on the recent oil plunge, managing director of the National Iranian Oil Company, Roknoddin Javadi, said the NIOC's internal resources have dropped about 50 percent due to the sharp fall in oil prices, making it difficult for financing next year's projects.

Accordingly, contractors of oil, gas and petrochemical projects have relied on direct investment by international companies for new development plans.

Moreover, despite the sanctions remaining in place for the oil industry, as a result of the extension of nuclear talks between Iran and 5+1, three big energy companies from Japan and South Korea recently held talks with Iran's oil and gas officials to invest and participate in several joint ventures and development projects.

The main focus of the negotiations with the three Asian companies is investment for designing, manufacturing, installation and commissioning of gas pipelines and refineries across the country, according to MNA report.

Confirming the negotiations with Japanese and South Korean companies, Soheilipour said Japan's Mitsubishi Engineering and Energy Co. as well as South Korea's two top technology firms, Samsung and LG, have held several rounds of negotiations with NIGC over refinery and pipeline construction.

Pointing to the ongoing negotiations with international companies, Soheilipour said that several Japanese and Italian firms are willing to cooperate with Iran in oil and gas development projects "even before sanctions are lifted."

Mitsubishi has been one of the major Asian customers of Iran's crude oil over the past decade and is still a buyer of Iranian oil, although at a limited rate because of the restrictions put in place as part of the sanctions imposed on Iran by the United States over Tehran's nuclear energy program.

Samsung has undertaken several large-scale energy projects in the Arab countries of the Persian Gulf region and aims to expand its role in the region's energy market through investing in Iran's gas industry.

Meanwhile, representatives of companies from Canada, Australia, Malaysia, Russia, and China have held meetings with Iranian officials to discuss ways of financing natural gas projects, Soheilipour announced last week.

"Some of these companies specialize in construction of compressor stations," Soheilipour said, adding that all foreign companies interested in investing in the gas industry have received a special package, including project details, investment requirements and future tender information. "They see the possibility of a comprehensive nuclear agreement between Iran and the P5+1 as an opportunity to increase their share in the regional energy market."

The government has a three-year plan to increase daily natural gas output to more than one billion cubic meters, according to MNA. Therefore, the oil ministry has started negotiating with domestic and foreign investors to finance the mega oil and gas projects.