Iran switches economy to gas; saves oil for exports
Gulf Times
Thursday, 12 May, 2005, 11:56 AM Doha Time
By Marc Wolfensberger
Tehran: Iran, the site of the world’s second-largest natural-gas
reserves, will double gas production over the next five years, shift
its domestic economy to gas, and save oil for exports, a gas official
said.
Gas will provide 72% of the nation’s energy, up from 55% now,
Azizollah Ramezani, the planning director at the National Iranian Gas
Company (NIGC),said in an interview.
Iran’s gas output should reach 700mn cu m a day in 2010, compared with
375mn cu m today, he said.
`We’ve got plans to cover all the country’s energy needs with natural
gas,” Ramezani said in an interview on the 15th floor of NIGC’s
headquarters in central Tehran. Out of these 700mn cu m of gas, 50mn
will be for exports and ` all the rest” for domestic use, he said.
Switching to gas could help Iran export more crude oil, as it
struggles to meet quotas set by the Organisation of Petroleum
Exporting Countries.
Gas is the fastest-growing energy source in the world, with
consumption projected to double to 176tn cu ft by 2025, according to
the US Department of Energy.
For the past four months, Iran, Opec’s second-largest producer,
hasfailed to reach its Opec quota. The country’s crude oil production
has declined since January, reaching 3.88mn bpd in April, according to
Bloomberg estimates. Its Opec quota stands at 4.04mn bpd.
Iran’s revenue from oil exports will rise $4.5bn to $36bn in 2005, Oil
Minister Bijan Namdar Zanganeh said last month. It will get about
$900mn from exports of natural gas and gas condensates in 2005,
Ramezani said yesterday.
To increase gas output, Iran is relying mainly on South Pars, the
world’s largest gas reservoir, which it shares with Qatar. Gas output
from the deposit will reach 600mn cu m a day when the project’s 20
phases are completed, Khatami told reporters last month, calling it
the `beating heart of Iran’s flourishing economy.” Production from
the Iranian field, about 100km (62 miles) off Iran’s southern coast,
already accounts for more than a third of Iran’s gas output.
The South Pars deposit was discovered in 1966 by the Royal Dutch/Shell
Group.
Little was done to develop the field until the 1990s. It contains
600tn cu ft of gas, or about a tenth of the world’s gas reserves.
Iran imports about 26mn cu m of gas a day from neighboring
Turkmenistan and exports `up to 25mn cu m” a day to Turkey, Ramezani
said. `We’ll become a net exporter next year,” the planning director
said, counting on an increase in gas exports to Turkey to 30mn cu
m. In addition, Iran has plans to sell gas to Armenia and Kuwait.
Gazprom’s Armenian venture is about to start building a
natural-gaspipeline >From Iran, which will be finished by 2007, Vremya
Novostei reported in March.
A $4.2bn, 2,775-km pipeline to India from Iran through Pakistan is
also on the agenda to meet growing demand for gas in Asia’s
fourth-largest economy.
The pipeline, which the US opposes because of Iran’s alleged support
of terrorist groups as well as pursuit of nuclear weapons, would allow
Iran toexport an additional 70mn cu m a day, Ramezani said.
In addition, Iran plans to acquire six liquefied natural gas carriers
by 2010 to deliver gas to Asia. It agreed last year to sell China
250mn metric tonnes of LNG over a 30-year period. At least four phases
of the 20-phase South Pars development will be devoted to LNG,
producing the equivalent of some 100mn cu m of gas, Ramenzani said.
LNG is natural gas that is cooled to a liquid so it can be carried by
tankers rather than pipelines.
Iran’s state-owned gas company will spend $15bn – or $3bn ayear –
through 2010 to lay new pipes and build gas compressor plants,
Ramezani said. The length of the gas pipeline grid will grow 50% to
30,000km, he said.
`Some $7.5bn will be financed internally, and the rest through loans,
mainly >From Naftiran Intertrade Company,” a Switzerland-based
subsidiary of state-owned National Iranian Oil Co, the manager said.
It will also increase the number of service stations providing cars
with natural gas to make the fuel more attractive, he said.
Both oil and gas is heavily subsidised in Iran, contributing to waste
and pollution. A liter of gasoline costs Iranian drivers about 800
Iranian riyals (9 US cents). The parliament earlier this year rejected
a plan to gradually remove subsidies.
`This is a parliament decision, and we follow it,”Ramezani said.
“Personally, I believe price is a good tool to reduce consumption. We
should make use of it.” – Bloomberg