Removal of international sanctions on Iran would be a great change on the market of which is holding the world’s highest crude oil reserves. But it’s not only crude oil Iran can supply – the country has the second biggest gas reserves in the world.
According to BP’s Statistical Review of World Energy, overall natural gas reserves by the end of 2014 stood at 34 trillion cubic meters in Iran. This figure is around 18 percent of the total global natural gas reserves. It indicates that Iran has potential to become a major player in the natural gas market once the sanctions are lifted.
During the lengthy era of sanctions, merely 1 percent of gas produced by Iran went to the total global natural gas trade, with almost 90 percent of its natural gas exports going to Turkey, while the remainder went to Armenia and Azerbaijan.
Iran compared to other countries has great advantages. Apart from holding the resources, it also can produce them very cheaply. The production cost of gas in South Pars is almost 5 billion dollars compared to same amount of production in the Caspian Sea and Azerbaijan territory.
Soon after the Iranian Deputy Oil Minister Amir Hussein Zamaninia announced the international sanctions imposed on Iran’s oil and gas sector are expected to be lifted in October or November, an Omani delegation traveled to Tehran to create and finalize the deal for transferring Iranian gas to the sultanate via a pipeline across the Persian Gulf, a top energy official stated.
“Currently, the Iranian adviser for studying (the subsea section of) the pipeline for 200 kilometers from Kuhn-e Mubarak to Oman’s Sohar port has been chosen,” head of the National Petrochemical Company (NPC) Alireza Kameli said Wednesday.
The onshore section of the pipeline in Iran will be built for another 200 km from Rudan to Kuh-e Mubarak, he added.
“According to the plan, engineering studies in both the offshore and onshore sections will be carried out simultaneously so that the implementation of the two lines does not hit a snag,” Kameli added.
The $60 billion deal was concluded during President Hassan Rouhani’s visit to Muscat in 2013 to ship 10 million cubic meters per day of the Iranian gas to Oman for a period of 15 years.
This deal will leverage selling Iran’s natural gas to the region, especially Asian countries but as Kameli said the Persian Gulf littoral states are Iran’s top priority for gas exports although they are not going to ignore European market.
One of the advantages and opportunities created by this deal is the potential for Iran to play an important role in the EU’s future energy security, for instance it could potentially join the 16 bcm Trans Anatolian Pipeline (TANAP) that would run from Azerbaijan through Turkey and Greece before connecting with the Trans Adriatic Pipeline (TAP). That could allow Iran to export natural gas to Western Europe.
TANAP is projected to start delivering natural gas in 2020, and Iran could use this pipeline network for gas exports, although it will require the construction of infrastructure, such as gas compression stations. The necessary build out in infrastructure could mean that Iran doesn’t export gas to Europe for another decade.
“Iran and the European Union have already engaged in negotiations that involved several options for the export [of gas] to the European Union…. Of course, this does not mean that Iran intends to substitute Russia for its exports to Europe,” Adeli has been quoted as saying by Sputnik news service.
He added that Russia remained the main gas supplier to Europe, but mentioned that Iran could partially meet the growing EU energy demands both through pipeline supplies and liquefied natural gas deliveries.
Currently, many countries have voiced readiness to invest in our upstream and downstream gas sector and are seriously pushing for imports of the Iranian gas.
In a meeting with visiting French Foreign Minister Laurent Fabius in Tehran, Zangeneh said a new chapter will be opened in cooperation with Total to develop Iranian oil fields.
“Total has participated for more than 20 years in Iran’s oil projects. Meanwhile, French petrochemical companies have long been invested in the Iranian market. They are planning to boost their presence and finance Iranian petrochemical projects,” Zangeneh said.
According to Tehran Times, French companies will cooperate with Iranian partners on economizing energy consumption, LNG production, and equipment procurement projects, he added.
The French minister, for his part, said that he held constructive and positive negotiations with Iranian officials in the field of energy.Earlier this month, Total’s chief executive Patrick PolyOne said the company seeks oil and natural gas projects in Iran.
But it wasn’t only France, mentioned by Reuters; Many European companies have already shown interest in reestablishing business in Iran, with Germany sending its economy minister Sigmar Gabriel on the first top level government visit to Tehran in 13 years together with a delegation of leading business figures.
Iran’s deputy oil minister for commerce and international affairs, Hussein Zamaninia, said Tehran had identified nearly 50 oil and gas projects worth $185 billion that it hoped to sign by 2020. OPEC-member Iran has the world’s largest gas reserves and is fourth on the global list of top oil reserves holders.