Official: Iran’s Gas Export Plans Undeterred by Sanctions

A04744994.jpgTEHRAN (FNA)- Sanctions are hindering but not stopping Iran’s plans to export gas and to secure 8-10 percent of the world market by 2025, a top Iranian gas official said.

Reza Kasaeizadeh, managing director of the state’s National Iranian Gas Export Company (NIGEC), told Reuters the plans included supplying Europe via the so-called Persian Pipeline, a project under design, which could see first gas flows in 2014.

Iran has the world’s second largest gas reserves, almost 16 percent of the world’s total, but currently has no net exports partly because US sanctions have deterred investment by big Western energy firms with expertise and technology.

Iranian officials have dismissed US sanctions as inefficient, saying that they are finding Asian partners instead. Several Chinese and other Asian firms are negotiating or signing up to oil and gas deals.

“We cannot say that sanctions have not caused any problem for us but it has not stopped our work,” Kasaeizadeh said in an interview in NIGEC’s Tehran offices on Sunday.

“We have many projects on the way and our plan is to cover around 8-10 percent of the global gas trade by the year 2025.”

The world’s fourth largest oil producer is discussing or has gas deals with the Persian Gulf states, neighbors like Pakistan, Turkey and Armenia, and European countries such as Switzerland.

Following US pressures on companies to stop business with Tehran, many western companies decided to do a balancing act. They tried to maintain their presence in Iran, which is rich in oil and gas, but not getting into big deals that could endanger their interests in the US.

Yet, after oil giants in the West witnessed that their absence in big deals has provided Chinese, Indian and Russian companies with excellent opportunities to signing up to an increasing number of energy projects and earn billions of dollars, many western firms are slowly losing reluctance to invest or expand work in Iran.

Some European countries have also recently voiced interest in investment in Iran’s energy sector after a gas deal was signed between Iran and Switzerland regardless of US sanctions.

The National Iranian Gas Export Company and Switzerland’s Elektrizitaetsgesellschaft Laufenburg signed a 25-year deal in March for the delivery of 5.5 billion cubic meters of gas per year.

The biggest recent deal, worth €100m ($147m, £80m), was signed by Steiner Prematechnik Gastec, the German engineering company, this month to build equipment for three gas conversion plants in Iran. This is at a time when France’s Total, Royal/Dutch Shell and Norway’s Statoil have put on hold their shares in multi-billion dollar contracts.

As well as sanctions, price rows have held up some deals and, for now, Iran imports about as much gas as it exports.

“We can say we have no exports. I think actually (exports and imports) are equal, roughly equal,” he said.

Iran imports 8 billion cubic meters of gas a year from Turkmenistan, helping to supply north Iran which is difficult to reach from Tehran’s big gas fields in the Persian Gulf to the south.

Kasaeizadeh said the Turkmen deal had been raised to 14 billion cubic meters but the price for 2009 was not yet agreed. Supplies would rise gradually to the new level, he said.

Meanwhile, Iran exports about 10 billion cubic meters a year to Turkey. Those supplies were disrupted last winter, one of the coldest for decades, but Kasaeizadeh said gas production had now been increased from Iran’s huge South Pars field.

“Therefore this year’s conditions compared with last year are much better,” he said.

Turkey will be a key transit route for Iran’s plans to develop exports to Europe, a trade the United States opposes as it fruitlessly seeks to isolate Iran over its peaceful nuclear work.

Kasaeizadeh said the Persian Pipeline would take gas to Turkey, Greece, Italy and other interested Europeans. He said talks had started with Italy but not with Greece.

An existing Iranian pipeline, I-Gas 9, was earmarked to take gas to the Turkish border with capacity of 100-110 million cubic meters a day. First gas flows could start in 2014, he said, but he added that the project would proceed in stages.

“We have hired consulting engineers recently in Iran to do the design work, and we have entered negotiations with European countries to have them participate in the implementation or construction of this pipeline,” he said.

Turkish sources have said Turkey wanted Iran to hook up to the Nabucco pipeline, a plan backed by Turkish and European firms, rather than pursue the Persian Pipeline scheme.

Kasaeizadeh played down any talk of differences with Turkey, which plans to invest in the South Pars gas field.

“We are negotiating with Turkey over this (Persian pipeline). Turkey itself is interested in this. It is investing in three of the South Pars phases and part of this gas will be allocated to Turkey itself,” Kasaeizadeh said.

Iran has said it prefers pipelines to making liquefied natural gas (LNG) for shipment. Iran has several LNG plans, but they are still largely on the drawing board.

Kasaeizadeh said work on one project, Iran LNG, was 11 percent complete and being done by Iranian, European and South Korean contractors. He said other LNG plans were also proceeding but sanctions were causing delays.

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