Caspian Overview: Iran to Cut Flaring, Attract Investors
Iran’s commercial output of 750mn m3/d of raw gas could reach 1bn m3/d by early 2018, while domestic demand remains flat. Last year Iran exported 8.4bn m³ to Turkey and imported 9bn m³ from Turkmenistan.
“We waste 200mn m³/d of gas, but there are projects that cost 20bn to optimise energy demand and raise the efficiency of industrial units in the coming years to curb the waste of fuels, especially gas which accounts for 70% of the country’s primary energy consumption,” deputy oil minister for international affairs and trading Amir Hossein Zamaninia told NGE.
Flaring wastes over 30mn m³/d. The efficiency of Iran’s power plants, which used 30% of Iran’s produced sweet gas last year, averages 37%. Iran plans to double the share of combined-cycle power plants in the country’s total electricity fleet so they account for half by 2021.
Iran with 75 GW capacity generated 282 TWh of electricity in 2015. The volume would increase by 26.5 GW by 2021, of which 5 GW would belong to renewables.
For now, Iran plans to complete the development of the giant South Pars gas field, which produces 450mn m³/d, so that its output reaches 700mn m³/d by 2018.
Iran is preparing to introduce 50 upstream projects (21 gas and 29 oil fields) for foreigners in the coming months, based on the newly designed oil and gas contract model, known as Iran Petroleum Contract (IPC) which is projected to add 200mn m³/d of natural gas and 380mn m³/d of associated gas to the country’s gas production capacity.
Iran has identified $185bn-worth of projects for the next five years and hopes to fund a part of these projects based on the IPC, Zamaninia said.
Iranian projects have advantages compared to other countries, he said, including a high rate of return, which sometimes stands at 25%.
He said that Iran would have 200mn m³/d of extra gas to export by 2018. For now the country has – at least on paper – a 50mn m³/d gas export deal with Iraq, a 27mn m³/d deal with both Oman and Turkey and a 22 mn m³/d deal with Pakistan.
Iran, Russia and Azerbaijan’s presidents met in Baku on August 8. The energy ministers also participated in the meeting.
Azerbaijan's state-owned Socar is interested in developing oil and gas fields in the Iranian and Russian sectors of the Caspian Sea, said Azerbaijan’s president Ilham Aliyev during the tripartite meeting between Russian, Azerbaijani and Iranian Presidents. Iran has 10% share in Azerbaijan’s Shah Deniz gas field.
Azerbaijan’s economy minister Shahin Mustafaev also said that Russian businesses had earned $2bn from investments in Azerbaijan’s oil and gas industry. Russian private company Lukoil for example has a 10% share in the Shah Deniz gas project. It is also very active in the retail oil products market and has 20 petrol stations in the country. Earlier the company also had a share in the Azeri-Chirag-Guneshli oil project but it pulled out.
Russia and Iran are considering the possibility of gas swaps to the north of Iran through Azerbaijan and building a gas liquefaction plant on the south of the country, energy minister Alexander Novak told journalists in Baku. “Today we considered a long-term gas swap to the north of Iran through Azerbaijan with the possibility of building a gas liquefaction plant in southern Iran. We plan to receive an equivalent volume of liquefied gas, which will be exported to the southeast Asian markets, where demand will grow,” he said. “These projects can only raise efficiency and reduce the cost of transporting oil and gas,” Novak added.
It was earlier reported that Gazprom is interested in taking part in Iran’s gas industry development and participating in upstream projects, and building “Iran LNG”, with 14bn m³/yr capacity. The project is only half built since the partner, Germany’s Linde, quit with the arrival of sanctions on Iran. It could be operational in 2018.
Azerbaijan desk