Zanganeh Highlights Gas Export Barriers

EghtesadOnline: Iran is facing a bumpy road in expanding natural gas export, Oil Minister Bijan Namdar Zanganeh said in an interview on Sunday, pointing to operational and financial impediments in gas trade with Pakistan in the east and Iraq along the western borders.

News ID: ۷۴۳۴۳۴

22 August 2017

"There are two routes for gas export to Iraq: a pipeline that stretches into Baghdad through the city of Naft Shahr (Kermanshah Province) and a second pipeline that goes to Basra south of Iraq. Deliveries to Baghdad is underway and will gradually reach 30 million cubic meters per day" from 7 mcm/d initially, Zanganeh said on the national television Sunday night, Shana reported.

Supplies to Basra could also begin by March 2018 and eventually rise to 30 mcm/d. But the issue lies in Iraqi payments for the imports of Iranian gas.

"Iranian and Iraqi banks do not connect easily, because most of the Iraqi banks are controlled and run by the Americans. It has caused some problems in their payments," he added.

The Arab nation started receiving Iranian gas in June, state-owned oil company, NIOC, said at the time. Exports began at a rate of 5 million cubic meters a day, but is planned to reach 25 mcm/d in 2018 before topping out at 50 mcm/d in 2020.

Iraq, which also imports electricity from Iran under a renewed contract for 2017, cleared $500 million of its backlog for previous electricity purchases so far this year.

The more pressing challenge is effectuating a pipeline project to supply Iranian gas to Pakistan.

The two countries have been involved in talks over constructing a gas pipeline that would stretch more than 2,700 kilometers from Asalouyeh in southwest Iran through the Pakistani provinces of Balochistan and Sindh.

But the Pakistani side has underperformed, resorting to reasons from financial constraints to trade restrictions for their lack of commitment to the Iran-Pakistan pipeline, also known as Peace Pipeline.

"Pakistan is not straightforward [about the gas project]. A few days after the ouster of Mr. Nawaz Sharif as prime minister, I sent an official letter to former petroleum minister, Shahid Khaqan Abbasi, expressing Iran's readiness to begin gas supply to Pakistan," Zanganeh said.

"Khaqan Abbasi was selected as [interim] prime minister a few days later and the response to the letter has since been unclear."

Iran has reportedly developed most of the pipeline in its territory, but much of the pipe-laying in Pakistan has yet to be completed.

"We will pursue the deal through legal channels. We have spent billions of dollars on the pipeline and operations have come to a standstill," said Zanganeh, complaining that Pakistan has consistently ducked the issue since sanctions against Tehran were lifted in early 2016.

"Such an attitude is unacceptable by international trade protocols," he added.