Noticeable Decline in Liquid Fuel Consumption

"Iran has abundant natural gas deposits and it is more cost-effective to use gas for power generation instead of liquid fuels that can be exported with higher tariffs," Houshang Falahatian was quoted as saying by Barq News.

Iranian power plants have received an average of 180 million cubic meters of feedstock gas per day in seven months (March-Oct), Financial Tribune quoted him as saying.

Referring to power-intensive sectors namely agriculture, he said, "Electrifying agro wells is in line with national interests because producing power with gas is more economical than generating it with diesel."

Due to the huge gap in real energy production costs and the bills sent to consumers, the government annually pays about $1 billion in subsidies.

Iran's fuel consumption is far more than the global standards. Natural gas is the largest source of fuel for electricity generation accounting for 70% of total output.

The current price of generation and distribution of each kilowatt-hour of electricity is 700 rials (0.7 cent). This is while it costs the industry up to 3,000 rials (2.7 cents). “This is bankrupting the power industry.” 

Falahatian says close to 200,000 farm wells were electrified in the last three decades. There are at least 210,000 wells which are still running on mazut and the government-affiliated Power Generation, Distribution and Transmission Company (Tavanir) has started to gradually connect them to the national grid.

Replacing eco-unfriendly fuels with natural gas is among the Oil Ministry priorities, he said.

"Daily gas output at 850 million cubic meters has increased by 30% compared to five years ago when total production was 620mcm/d."

There are cement plants in remote areas that are not connected to the national gas grid and burn an estimated eight million tons of mazut per annum, he recalled.

Gas production from the giant South Pars Gas Field off the Persian Gulf was 280 million cubic meters in 2012. The volume now has surpassed 610 mcm.