Gulf Daily News
Vol XXVII NO. 38 Tuesday 27 April 2004

Tehran gas exports push targets Asia and Europe

TEHRAN: Iran, which holds some 15 per cent of the world’s natural gas
reserves, is boosting exports of gas to its neighbours in the hope of
picking up sales to Asia and Europe in the future.

“In the short term, we are looking to export our gas to neighbouring
countries, but we are also working on exports of liquefied natural gas (LNG)
to Asia and Europe,” National Gas Export Company director Rokneddin Javadi
said.

“The issue is that the projects to export to neighbours, such as those
across the Persian Gulf, can be completed in two years. But an LNG export
project needs five years,” said on the sidelines of a gas export conference
in Tehran.

He said Iran expects to sign within the next two weeks a contract to supply
15 million cubic metres a day by pipeline to the UAE.

And he said the Islamic republic was also in talks with Kuwait and the UAE
for two other similar contracts, hoping to export 1.5 billion cubic metres
to the two countries each year.

Also expected later this year are contracts with Armenia and the Russian
Caucasus republic of Nakhchavan, covering the sale of 3bn cubic metres
annually.

And a 25-year contract with Turkey allowed Iran to sell 3.5bn cubic metres
there in 2003. That figure is expected to rise to 5bn cubic metres in 2004,
if a contractual dispute can be worked out.

Turkey, complaining the gas is of poor quality, has demanded a price cut and
has threatened to turn to Russia instead.

“You have to ask the Turks what is going on. If they abandon the contract,
they will have to pay a heavy fine,” an Iranian industry official said.

Mehmet Bigic, head of Turkey’s Botas company, hinted that the deal was still
valid: “It is not possible to quit a 25-year contract. But you can
renegotiate.”

Despite the ongoing difficulties with Turkey, Javadi nevertheless said he
hoped Iranian gas sales would total $2bn annually in 2010.

But Iran is also counting on this figure jumping dramatically if it can get
LNG exports by tanker moving further afield, notably to the potentially huge
markets of the Indian sub-continent, China – with whom a memorandum on
future sales has already been inked – and Europe.

But such sales are pending the completion of LNG production facilities, as
well as the costly laying of pipelines that need to cross sensitive areas
such as the Pakistani-Indian border.