Iran Keeping Hopes Alive for Natural Gas Export to Europe

EghtesadOnline: Despite years of speculations and no action, Iran continues to weigh options to transport its profuse natural gas resources to Europe and emerge from a marginal exporter in the region into a major player in the global market.

News ID: ۷۷۹۹۰۹

23 October 2017

In an interview with IRNA on Friday, Mohammad Hossein Adeli, the secretary-general of the Gas Exporting Countries Forum, kept the door open for Iran’s gas export to Europe through pipeline and in the form of liquefied natural gas.

“Both methods have their advantages,” said Adeli, whose second two-year term as the GECF chief will end by the end of the year.

“Gas export through pipelines will be cheaper but it comes with political considerations … LNG allows Iran to transport its natural gas anywhere in the world without facing political challenges,” Financial Tribune quoted him as saying.

Officials have for years promoted the idea of laying and extending a gas pipeline through Azerbaijan or Armenia in the northwest through Europe, but the scheme has not taken off due to financial reasons as well as complications of bringing together several nations to execute a multibillion-dollar joint venture.

All of Iran’s gas export of about 40 million cubic meters per day flows through pipelines, mainly to Turkey and Iraq. This is dwarfed by its production that stands at around 880 mcm/d, most of which are burned to meet the increasing demand at home.

Iran has considered eight gas export routes to Europe with an annual capacity of 25-30 billion cubic meters a year.

But with plans to construct thousands of kilometers of gas pipeline to Europe looking like a distant possibility, Adeli pointed to Iran’s growing interest in launching its LNG production and supply chain.

“Taking stock of political considerations in the region, LNG export is a top priority,” he said.

Iran is pushing ahead with plans to build several LNG production and export facilities, and once the infrastructure becomes operational, the country hopes to export 5-10 million tons of LNG to Europe.

Despite importing more than 80% of its crude oil and natural gas demand, Europe will be a difficult market for Iran to tap into, as Russia continues to dominate the European energy market.

“Russia is the single largest [gas] supplier to Europe with more than 33% market share,” Adeli said, acknowledging that Iran’s prospective exports will not nearly measure up to Russian supplies.

According to a report by Bloomberg, Gazprom PJSC, Russia’s state-run export monopoly, shipped a record amount of gas to the European Union last year and accounts for about 34% of the trading bloc’s use of the fuel. Russia will remain the biggest source of supply through 2035, according to Royal Dutch Shell.

Iran’s idleness in the LNG market becomes even more conspicuous compared to Qatar, a small Arab nation that shares the world’s largest natural gas field with Iran in the Persian Gulf but holds the title as the world’s largest LNG supplier, holding around 30% of the global market.

Iran holds 34 trillion cubic meters of natural gas reserves, the largest in the world ahead of Russia with 32.6 trillion cubic meters, according to BP estimates.