Thursday, October 9, 2008

Iran’s Gas Exports Look East

From Reuters India:
Most of Iran's future gas exports are likely to head to Asian buyers, skipping Europe due to tensions with the West, the managing director of Iranian petrochemical company Qeshm Energy said on Thursday.

Bijan Khajehpour said Iranian exporters would favour Asian buyers as they come with less political baggage and were already investing significantly in the Iranian oil and gas sector while Europeans were becoming increasingly wary.

"Within the foreseeable future, I don't see major Iranian gas exports to Europe," Khajehpour said at an industry conference in Amsterdam.

"If there is any gas left for export beyond our immediate neighbourhood then it will probably go east. Potential Asian buyers do not come with political strings, that is very important for a country like Iran."

European firms have become reluctant to invest in Iran due to heightened tension over Tehran's disputed nuclear programme. Iran sits on the world's second-largest gas reserves after Russia but sanctions have slowed sector development.

"The reality is that Chinese, Indian, Malaysian and generally Asian companies are the investors in the Iranian oil and gas sector right now," he said.

"There are other obstacles to exports to Europe: political tensions, the nuclear issue, Iran's domestic consumption patterns, and there are already existing LNG (liquefied natural gas) commitments to India and China."

Iran, which is also the world's fourth-largest oil exporter, has not yet exported any LNG but has previously said it will be able to produce 77 million tonnes a year by 2014. Construction of Iran's first LNG plant began over a year ago.
Cost issues and sanctions that limit access to technology have made it more beneficial for Iran to export gas via pipeline than by tanker after cooling it to liquid.

But analysts have said the only large-scale pipeline project, which would pump gas across Pakistan to India, is fraught with security concerns and pricing disputes.

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