Iran faces Challenges Realizing Natural Gas Potential

By , for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iran Business News.

With 33.5 trillion cubic meters of natural gas, Iran has the largest conventional gas reserves in the world. Along with its vast oil reserves, it also has sizable, non-associated conventional gas resources that are being developed aggressively.

With regard to exports, however, natural gas has never matched the significance of oil in Iran. Nonetheless, Tehran has boosted gas production tremendously in the past few years, despite sanctions and other challenges. Up until 2016, almost all of Iran’s gas production was used for domestic consumption, freeing up more oil for export.

In the meantime, a saturation of domestic utilization has allowed Iran to boost its exports, which are still negligible compared to the resource potential. Officials recently said that gas exports grew by 64% during the period of March 21 to Aug. 22, 2017, compared to the same period in 2016.

According to the “BP Statistical Review of World Energy,” Iran produced 202 billion cubic meters (bcm) of gas in 2016. The country’s Ministry of Petroleum envisions annual gas production of 300 bcm by 2020, which is a reflection of its enormous resource base. Other objectives and priorities are as follows:

  • remain the third largest gas producer in the world with gas production of 360 bcm per annum by 2025;
  • inject gas into the oil fields to maintain and increase oil production;
  • supply gas to power stations, gas-based industries and petrochemicals and to export the value-added products at economically viable prices;
  • replace domestic demand for petroleum products with natural gas and maintain the share of gas in Iran’s energy basket above 70%; and
  • export gas to the regional countries, the Indian subcontinent and Europe.

Experts note one omission — a strategy to produce liquefied natural gas (LNG), which is easier to transport to distant markets, including Europe. Though Tehran has one significant project in this sector, Iran LNG, the development of this technologically more complex branch of the gas sector is not a priority for Iran in the medium term.

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