Iran, the second largest and most populous state in the Middle East, has the world’s largest proven natural gas reserves which are around 34tcm, constituting about 18% of the world’s total proven reserves, and is a major gas producer, at around 172.6bcm/year.
Based on these reserves Iran has the potential to be a significant LNG exporter, however, no LNG exports have been possible, despite a number of projects, due to a range of factors. A key issue has been the international sanctions imposed on Iran due to its nuclear programme, but other factors include rising local gas demand and use of gas for enhanced oil recovery.
The election of President Rouhani in 2013 and the lifting of most of the international sanctions in 2015 has raised the prospects that stalled LNG projects may progress, however, difficulties financing the main gas company may delay developments.
Summarised details of Irainian gas industry
Analysis suggests that the future of LNG in Iran is optimistic with plenty of gas production available. However, this view of the future hinges on internal issues such as reform of local gas subsidies and production exceeding domestic consumption to allow Iran to fulfill both domestic and potential international commitments. With the lifting of sanctions it is now possible for Iran to be integrated into the global LNG market and to bring foreign companies back to the country to improve upstream development.
The MJMEnergy LNG Supply Handbook 2015-2035 forecast for LNG in Iran.
Using three different cases (High, Medium and Low) the LNG Supply Handbook offers the following forecasts.
The High Case assumed that sanctions be lifted by the
end of 2015, leading to completion of Iran LNG Train 1
by 2020 and Train 2 by 2022, with LNG exports of 7.5bcm
in 2022 and 14.9bcm by 2035.
The Mid Case assumed that sanctions are lifted later, in 2016, and only Train 1 of Iran LNG is constructed, leading to LNG exports of 5bcm in 2022, increasing to 7.5bcm in 2035.
In the Low Case sanctions are not lifted, and Iran does not become an LNG exporter, relying instead on existing pipeline technology to export gas to neighbouring countries.
Now that most of the international sanctions have been or will be lifted Iran is free to pursue its aspirations as an LNG supplier although it may take another five years before Iran is able to produce and ship LNG.
But is it too late for Iran to join the ranks of global LNG suppliers, in a world where LNG may not be so much in demand and even if they do can Iran produce and ship LNG for less than $7/MMBtu in order to compete in a market place that is potentially already oversubscribed?
This article is based on the executive summary from country chapter Iran taken from
the LNG Supply Handbook 2015-2035.
- LNG Supply Handbook 2015-2035
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