Greater Caspian Weekly Overview - 22 January 2016
Iran, Oman discuss gas trade
After a visit to Oman, Iran’s energy minister Bijan Namdar Zanganeh said that the two countries had negotiated a gas deal and a fresh round of talks will start in ten days to pave the way for a gas export deal.
Zanganeh said on January 21 that the major issue in gas talks with Oman was to sign a contract for 28mn m³/d, Shana reported.
“We talked about building an underwater pipeline jointly. The price of gas depends on the oil price, but based on current futures markets, the value of exporting 28mn m³/d is about $1.5-$2bn/yr.
Zanganeh added that the two sides should prepare their studies for the pipeline and issue tenders by the summer.
He added that Oman has 1.5-2mn mt/yr of free capacity to liquefy Iranian gas as well.
Iran and Oman signed an memorandum of understanding in 2013, whereby Iran will export 28mn m³/d by a subsea pipeline, which is expected to be built over one and a half years.
Oman’s energy minister Mohammed bin Hamad Al Rumhy told Reuters on January 21 that he was “very optimistic that now the sanctions have been lifted, the gas pipeline project will move in a faster track than before.”
Other gas export plans
Iran also has agreements to export 50mn m3/d and 22 mn m3/d to Iraq and Pakistan. Iran says this volume can be raised in future based on a new round of negotiations. The managing director of the National Iranian Gas Company, Hamid-Reza Araqi said earlier: “In post-sanctions era, Iran will be able to attract over $40bn in build-own-operate and build-operate-transfer methods. By establishing logical and wise relations with neighbouring countries, we can easily export gas to these countries,” he explained.
Beside exporting gas via pipelines, Iran has also planned to resume construction of Iran LNG project with 10.4 mn mt/y capacity, aimed to export gas to Europe and east Asia.
The country is producing about 700 mn m³/d, projected to reach 1bn m³/d by late 2018 and 1.3bn m³/d in the next decade.
Domestic consumption
Last year, Iran’s daily gas demand stood at more than 520mn m3/d, while oil production needs a further 200mn m3/d to keep reservoir pressure up.
Iran re-injected 93 mn m3 /d of gas to old oil fields, which share more than 80 percent of total crude oil production in the country and delivered about 135 mn m3 /d to power plants.
Iran’s daily gas demand exceeded 608mn m³ on January 19.
Iran has also planned to increase power generation with 5 percent pace in coming years, while more than 3 million new households should be supplied with gas. Currently about 19 million households consumes more than 250 mn m3/d of gas in average.
Gas share about 66 percent of Iran’s total primary energy consumption.
Boosting gas refining capacity
After implementation of a new gas refining unit on January 10, Iran is preparing to launch another new gas sweetening units in South Pars in February.
Gas sweetening units at phases 20 and 21 of Iran’s South Pars gas field will be ready for the intake of sour gas next month, said Alireza Ebadi, the two phases’ development project manager.
The development of phases 20 and 21 is aimed to produce 50mn m³/d of natural gas and 77,000 barrels of gas condensates.
Iran would start early gas production from these two phases by March.
Petrochemical sector
Iran produced 34.78mn mt and exported 14.3mn mt of petrochemicals in the first nine months of the fiscal year, a rise of 21% on the same period last year.
Iran produced 44.6mn mt of petrochemicals last fiscal year, using some 37mn m3/d of feedstock gas.
Iran’s petrochemical sector has set an annual output target of around 129mn mt by the end of the country’s sixth five-year development plan (2021).
Iran cut the price of feedstock gas price for petrochemicals plants by almost a third on January 15, from $130/'000m³ to $80/'000m3.
Central Asia: Kazakhstan to export more
Kazakhstan plans to increase gas exports, energy minister Vladimir Shkolnik said at a briefing in Astana on January 20. “At present nine regions of Kazakhstan are supplied with natural gas and 42% of our country is supplied with gas. We plan to supply 14 big towns – population of 160,000 or more – with gas by 2018,” Shkolnik added. He said in 2015 Kazakhstan produced 45bn m³/d, or 5% more than 2014.
Tapi project discussed with Afghanistan delegation in Ashgabad
Afghanistan’s finance minister Eklil Akhmad Khakimi met with the foreign affairs minister of Turkmenistan in Ashgabat January 19.
Turkmenistan.ru portal reported that the sides have confirmed their commitment to further intensify bilateral dialogue and also to cooperate in trade, energy and transport.
The ground-breaking ceremony of the Tapi gas pipeline took place on December 13, in Ashgabad. The 1,800-km gas pipeline will have an annual capacity of 38bn m³.
If completed the hugely ambitious project will stretch from the southeast of Turkmenistan to Afghanistan, cross Pakistan and ultimately reach India.
Caucasus: Azerbaijan's gas production slips
Azerbaijan’s gas production reached 29.1bn m³ in 2015, down 1.6% on 2014, according to an article written by energy minister Natig Aliev and published January 15 in official paper Azerbaycan. But a week later, the state statistics bureau (Goskomstat) put the total at 29.94bn m³, an increase of 1.1% on 2014’s 29.61bn m³. But of that, only 19.7bn m³ were commercial, the rest being reinjected. Of the total commercial gas, 12.2bn m³ came from the BP-operated projects offshore, Shakh Deniz and Azeri-Chirag-Guneshli; and the rest mostly from onshore fields operated by state Socar.