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Official: Iran to join LNG club in two years

LNG is super-cooled to minus 162 degrees Celsius for shipment by special tankers.

Head of the National Iranian Oil Company (NIOC) sees Iran joining the elite club of LNG exporters in the next two years, which would crucially strengthen the resource-rich country’s clout in the energy market.

Iran possesses the world’s largest proven gas reserves, with a potential to become a top producer. But a dramatic rise in domestic consumption means the country has to keep much of the gas produced at home for now.

The first Iranian LNG unit has yet to come on stream, with one official saying the project is being implemented with 60% physical progress, pending the removal of sanctions to import necessary equipment and structures.

“Commissioning of LNG units is a function of technology and investment. In this regard, negotiations have begun with the countries which possess the technology for gas liquefaction and LNG production,” NIOC head Roknoddin Javadi said on Monday.

Iran had contracts with the Anglo-Dutch Royal Dutch Shell, Spain’s Repsol and France’s Total to build three LNG plants but they abandoned the projects in 2010 under US and European pressures.

The plan is to build a capacity for exporting 40 million metric tons a year of LNG which is super-cooled to minus 162 degrees Celsius for shipment by special tankers.

Iran is increasingly on Europe’s radars as a new source of gas amid tensions with Russia which is the prime supplier of the fuel to the continent.

Gas production facilities in Asaluyeh in southwest Iran

This element might factor prominently in the European companies’ rush for new oil and gas schemes in Iran which sees sanctions being removed by early 2016.

For significant Iranian gas exports to Europe, a pipeline must be built for a length of 4,000 kilometers but Javadi says that’s not the option for now.

“Economic calculations show that LNG production is more viable in view of the existing market conditions,” he said.

Iran currently produces about 175 billion cubic meters of gas a year. It has seen domestic consumption rise 66% in recent years, making the country the world's fourth biggest gas consumer after the US, Russia and China.

Iran exports about 9 billion cubic meters a year to Turkey and also swaps gas with Azerbaijan and Turkmenistan and with Armenia for electricity.

Several gas production projects are in different stages of implementation which mainly includes development of the giant South Pars field.

Phases 15 and 16 of the field are expected to come online soon with a capacity to produce 1.7 billion cubic feet of gas a day.


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