Iran says gas export plans justifiable
A senior Iranian gas executive said early February that exporting Iranian gas to Pakistan and India was economically justifiable despite "huge" discounts in Qatar's gas price.
Commenting on Iran's gas export plans to Pakistan and India, the managing director of the National Iranian Gas Company, Hamid-Reza Araqi said Iran produces most of its gas from fields that are jointly owned by Qatar, which is a major LNG exporter. So, every kind of gas export may be economically justifiable, Shana news agency reported on February 5.
He did not specify the "huge" discount, offered by Qatar, but Reuters reported late December that India’s biggest gas importer, Petronet LNG, would buy LNG from Qatar’s RasGas at almost half the original price, in a renegotiated deal that will save about $605mn/yr. Petronet though had a particularly onerous contract, as the price was linked to the Brent price over a five-year period.
Petronet has a 25-year contract with Rasgas for 7.5mn mt/year of LNG. But it has reduced purchases by about a third this year owing to high prices, substituting costly supplies from Qatar with cheaper spot shipments.
On the other hand, Pakistan and Qatar have inked a government-to-government deal for the award of a $16bn contract for LNG supply in December 2015.
Iran wants to revive the Peace pipeline, aimed at exporting gas to Pakistan and India. New Dehli withdrew from the Peace pipeline owing to sanctions on Iran, while Pakistan has not yet started laying pipes in its territory, despite its obligation to start taking 22mn m3/d last January 2015.
Gas swap
Iranian officials have also announced that Tehran has been negotiating with Turkmenistan and Russia to take their gas in the north of the country and deliver the same amount in the Persian Gulf. It is not clear how Iran can deliver gas to Persian Gulf, while there are not any LNG plants, or on what terms Turkmenistan would transport Russian gas to Iran.
On the issue of gas swap with Russia, Araqi said: “We have not yet reached agreement with Russia’s Gazprom. However, there is a potential for receiving gas from Russia and Turkmenistan from the north and delivering gas in the south. The implementation of the gas swap plan is dependent on resolving issues such as the LNG price and market conditions,” he added.
Iran plans to complete the Linde-designed Iran LNG plant with 10.4mn mt/yr production capacity. This plant also needs money: $2.5bn could finish off the half-built plant in three years or so.