Lack of Investment Hampering Iranian Gas Sector

Despite having the world's second largest reserves, Iran’s natural gas sector is underdeveloped and used mostly to meet domestic demand mainly due to lack of technology and foreign investment, the US Energy Department said .

A report published by department’s Energy Information Administration said, “In contrast to the decreasing oil production, natural gas development has been slowly expanding. Nonetheless, natural gas production has been lower than expected as a result of a lack of foreign investment and technology.”

Natural gas accounted for about 59 percent of Iran's total domestic energy consumption in 2010, with oil consumption at 39 percent of total energy use, the report said.

Country’s upstream investment in both oil and natural gas projects has been affected due to sanctions enacted in 2011 and 2012, the report said.

“As a result of the poor investment climate and international political pressure, some international oil companies, including Repsol, Shell, and Total, have divested from Iran's natural gas sector. In response, Iran has looked toward eastern firms, such as state-owned Indian Oil Corp., China's Sinopec, and Russia's Gazprom, to take a greater role in Iranian natural gas upstream development. Activity from these sources has also been on the decline because of imposition of sanctions on technology and financial transactions,” EIA said.

However, the report said that  Iran's natural gas production has grown and likely will continue to increase in coming years.