Iran Eyes HIke for Domestic Gas Prices
Iran's draft budget, submitted to parliament, indicates the government plans to cut gas subsidies a little in the year from March 21 2019.
Gas is very cheap in Iran and according to the International Energy Agency, in 2017 the government lost over $16.3bn in gas subsidies, of a $45bn fossil-fuel subsidies bill.
But the increase will vary. According to a report released by Parliament’s research centre February 1, Iran plans to keep prices for housing and transportation sectors unchanged, but the price for steel and petrochemicals will soar.
Tehran is looking to receive over rials 245 trillion (about $4.5bn, based on the official exchange rate) from selling 206.17bn m3 gas to the domestic market next year.
Iran increased the gas price for steel firms by 95% to $23.6/’000 m3 February 2, which pushed the firms’ share value down by 3-7% on February 3. The release of gas price-related statistics by parliament also affected petrochemical companies’ share value significantly.
Iran’s gas demand:
|
|
Current fiscal year |
Next fiscal year |
Growth (y/y) |
|||
|
Sectors |
Bn m3 |
Price |
Bn m3 |
Price $/000 m3 |
Volume |
Price |
|
$/000 m3 |
||||||
|
Housing |
97 |
16.7 |
95.09 |
16.7 |
-2% |
- |
|
CNG |
8 |
45.3 |
8.438 |
45.2 |
5% |
- |
|
Petrochemicals (as feedstock) |
7.7 |
57.9 |
7 |
147.1 |
-9% |
154% |
|
Petrochemicals (as fuel) |
12.1 |
24.3 |
11.482 |
24.3 |
-5% |
- |
|
Steel firms |
8 |
24.3 |
10.16 |
47.8 |
27% |
95% |
|
Power plants |
74.2 |
7.2 |
74 |
8.3 |
0 |
15.40% |
|
Total |
207 |
|
206.17 |
|
-0.40% |
|
Source: Parliament’s Research Center’s estimation, published February 1, 2019. Based on official USD rate for next year.
Iran also expects to export $4.5bn natural gas to Turkey and Iraq next year. The country delivers 25mn m3/d to Turkey and 27-30mn m3 to Iraq. However, oil minister Bijan Zanganeh announced that Iraq has stopped making its $200mn/month gas payments since the US imposed oil sanctions on Iran in November 2018.
The sums show however that exporting about 20bn m3 gas to Iraq and Turkey is almost as lucrative as selling more than ten times as much gas at home.
On the other hand, the parliament’s research centre says above 56% of the total domestic gas sale revenues ($2.536bn) will have to be spent on gas distribution and other costs.