The chances of Iranian and Israeli gas to reach European market are not good, Charles Ellinas, CEO of Cyprus-based energy consultancy e-CNHC believes.
“Gas prices in Europe are too low to make such prospects commercially viable,” Ellinas, who is also a nonresident senior fellow with the Atlantic Council and has over thirty-five years of experience in the oil and gas sector, told Trend.
The expert noted that right now gas prices in Europe are under $5/ British Thermal Unit (mmBTU) and are forecast to remain in the range between of $5/ mmBTU and $6/mmBTU in the long-term, according to Platts.
Meanwhile, the price of Iranian gas supplying to Turkey was at $5.8/mmBTU in 2016, Ellinas said.
“At such price by the time it reaches Europe it will be over $7/mmBTU, which would be too high to attract buyers,” the analyst said.
In addition, according to Ellinas, most Iranian gas is used domestically, not leaving much for export. The expert believes, that similar comments apply to Israeli gas, whichever way it is transported to Europe.
He noted that because of the price Noble and its partners, developing the Tamar gas field in Israel, charge The Israel Electric Corporation, even before any gas leaves Israel it will cost over $4/mmBTU.
“Then you have to add the cost of pipelines to reach Europe. Whether it is a pipeline through Cyprus to Greece and then Europe or a pipeline through Turkey, the price of gas in Europe needs to be over $7-8/mmBTU to make such exports viable,” Ellinas said.
The expert stressed that based on the above, there are no viable routes to supply Iranian or Israeli gas to Europe at prices within the long-term forecast of $5-6/mmBTU, adding that even the more competitive US LNG is struggling to get inroads into Europe within such prices.
“Asia may be a better market for Iranian or Israeli gas, but in the form of LNG. And even then it will be challenging,” Ellinas said.
According to OPEC, Iran has 33.5 trillion cubic meters of proven gas reserves – the second largest in the world after Russia. In Israel, two giant fields – Tamar and Leviathan were discovered in 2009 and 2010 respectively. Gas reserves of these fields amount to tens of trillion cubic feet.